0000040729us-gaap:DesignatedAsHedgingInstrumentMemberally:InterestanddividendsoninvestmentsecuritiesandotherearningassetsMemberus-gaap:FederalHomeLoanBankCertificatesAndObligationsFHLBMember2021-01-012021-06-300000040729ally:AvailableForSaleDebtSecuritiesLocationMember2023-06-30

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, ~~2022,~~2023, 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

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 28, ~~2022,~~2023, the number of shares outstanding of the Registrant’s common stock was ~~308,529,835~~301,618,768 shares.

Table of Contents

~~INDEX~~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 30 , 2023, and 2022 ~~and 2021~~	5
	Condensed Consolidated Balance Sheet (unaudited) at June 30 , ~~2022,~~ 2023, and December 31, ~~2021~~2022	7
	Condensed Consolidated Statement of Changes in Equity (unaudited) for the Three Months and Six ~~Months~~Mon ths Ended June ~~30, 2022,~~ 3 0 , 2023, and ~~2021~~2022	9
	Condensed Consolidated Statement of Cash Flows (unaudited) for the Six Months Ended June ~~30,~~3 0 , 2023, and 2022 ~~and 2021~~	1110
	Notes to Condensed Consolidated Financial Statements (unaudited)	1312
	Note 1. Description of Business, Basis of Presentation, and Changes in Significant Accounting Policies	1312
	Note 2. ~~Acquisitions~~	14
	~~Note 3.~~ Revenue from Contracts with Customers	14
	Note 4.3. Other Income, Net of Losses	16
	Note 5.4. Reserves for Insurance Losses and Loss Adjustment Expenses	17
	Note 6.5. Other Operating Expenses	17
	Note 7.6. Investment Securities	18
	Note 8.7. Finance Receivables and Loans, Net	22
	Note 9.8. Leasing	3136
	Note ~~10.~~9. Securitizations and Variable Interest Entities	34
	~~Note 11. Other Assets~~	37
	~~Note 12. Deposit Liabilities~~	38
	~~Note 13. Debt~~	39
	Note ~~14. Accrued Expenses and~~10. Other ~~Liabilities~~	40
	~~Note 15. Preferred Stock~~	40
	~~Note 16. Accumulated Other Comprehensive Income~~Assets	42
	Note ~~17. Earnings per Common Share~~11. Deposit Liabilities	43
	Note 12. Debt	44
	Note 13. Accrued Expenses and Other Liabilities	45
	Note ~~18.~~14. Preferred Stock	46
	Note 15. Accumulated Other Comprehensive Loss	46
	Note 16. Earnings per Common Share	49
	Note 17. Regulatory Capital and Other Regulatory Matters	4549
	Note ~~19.~~18. Derivative Instruments and Hedging Activities	4853
	Note 19. Income Taxes	59
	Note 20. ~~Income Taxes~~Fair Value	5459
	Note 21. ~~Fair Value~~	54
	~~Note 22.~~ Offsetting Assets and Liabilities	6166
	Note 22. Segment Information	67
	Note 23. ~~Segment Information~~	63
	~~Note 24.~~ Contingencies and Other Risks	6570
	Note ~~25.~~24. Subsequent Events	6570
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	6671
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	~~118~~127
Item 4.	Controls and Procedures	~~119~~128
Part II — Other Information		~~120~~129
Item 1.	Legal Proceedings	~~120~~129
Item 1A.	Risk Factors	~~120~~129
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	~~120~~129
Item 3.	Defaults Upon Senior Securities	~~120~~129
Item 4.	Mine Safety Disclosures	~~120~~129
Item 5.	Other Information	~~120~~129
Item 6.	Exhibits	~~121~~130
Signatures		~~122~~131

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



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
BMC						Better Mortgage Company
Board						Ally Board of Directors
~~CCAR~~BTFP						~~Comprehensive Capital Analysis and Review~~Bank Term Funding Program

CD						Certificate of deposit

CECL						Accounting Standards Update 2016-13 (and related Accounting Standards Updates), or current expected credit loss




~~CFE~~COH						~~Cities for Financial Empowerment~~Corporate overhead
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

DVA						Debit valuation adjustment

EGRRCP Act						Economic Growth, Regulatory Relief, and Consumer Protection Act, as amended

ERMC						Enterprise Risk Management Committee

ESG						Environmental, social, and governance

Exchange Act						Securities Exchange Act of 1934, as amended
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
LIBOR Act						Adjustable Interest Rate (LIBOR) Act
LIHTC						Low-income housing tax credit
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~~

Table of Contents

Index of Defined Terms

Ally Financial Inc. • Form 10-Q


Term						Definition
OTC						Over-the-counter
P&C						Property and casualty
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~~Signature						~~8.125% Fixed Rate/Floating Rate Trust Preferred Securities, Series 2 of GMAC Capital Trust I~~Signature Bank

SOFR						Secured Overnight Financing Rate
SPE						Special-purpose entity

Stellantis						Stellantis N.V.
SVB						Silicon Valley Bank
Tailoring Rules						The rules implementing Title IV of the EGRRCP Act
TDR						Troubled debt restructuring
TLAC						Total loss-absorbing capacity



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)	2022		2021		2022		2021		($ in millions)	2023		2022		2023		2022
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	$	1,842	$	1,588	$	3,556	$	3,170	Interest and fees on finance receivables and loans	$	2,721	$	1,842	$	5,296	$	3,556
Interest on loans held-for-sale	Interest on loans held-for-sale	4		4		8		9		Interest on loans held-for-sale	7		4		22		8
Interest and dividends on investment securities and other earning assets	Interest and dividends on investment securities and other earning assets	203		147		391		278		Interest and dividends on investment securities and other earning assets	247		203		485		391
Interest on cash and cash equivalents	Interest on cash and cash equivalents	5		4		7		8		Interest on cash and cash equivalents	87		5		143		7
Operating leases	Operating leases	396		384		799		754		Operating leases	392		396		794		799
Total financing revenue and other interest income	Total financing revenue and other interest income	2,450		2,127		4,761		4,219		Total financing revenue and other interest income	3,454		2,450		6,740		4,761
Interest expense	Interest expense									Interest expense
Interest on deposits	Interest on deposits	263		268		474		574		Interest on deposits	1,418		263		2,635		474
Interest on short-term borrowings	Interest on short-term borrowings	19		—		24		1		Interest on short-term borrowings	11		19		23		24
Interest on long-term debt	Interest on long-term debt	184		230		369		480		Interest on long-term debt	252		184		479		369
Interest on other	Interest on other	1		—		1		—		Interest on other	—		1		2		1
Total interest expense	Total interest expense	467		498		868		1,055		Total interest expense	1,681		467		3,139		868
Net depreciation expense on operating lease assets	Net depreciation expense on operating lease assets	219		82		436		245		Net depreciation expense on operating lease assets	200		219		426		436
Net financing revenue and other interest income	Net financing revenue and other interest income	1,764		1,547		3,457		2,919		Net financing revenue and other interest income	1,573		1,764		3,175		3,457
Other revenue	Other revenue									Other revenue
Insurance premiums and service revenue earned	Insurance premiums and service revenue earned	280		278		560		558		Insurance premiums and service revenue earned	310		280		616		560
Gain on mortgage and automotive loans, net	Gain on mortgage and automotive loans, net	4		19		18		55		Gain on mortgage and automotive loans, net	5		4		9		18
Loss on extinguishment of debt		—		(73)		—		(74)
Other (loss) gain on investments, net		(124)		65		(119)		188

Other gain (loss) on investments, net										Other gain (loss) on investments, net	26		(124)		100		(119)
Other income, net of losses	Other income, net of losses	152		249		295		376		Other income, net of losses	165		152		279		295
Total other revenue	Total other revenue	312		538		754		1,103		Total other revenue	506		312		1,004		754
Total net revenue	Total net revenue	2,076		2,085		4,211		4,022		Total net revenue	2,079		2,076		4,179		4,211
Provision for credit losses	Provision for credit losses	304		(32)		471		(45)		Provision for credit losses	427		304		873		471
Noninterest expense	Noninterest expense									Noninterest expense
Compensation and benefits expense	Compensation and benefits expense	437		446		930		841		Compensation and benefits expense	448		437		985		930
Insurance losses and loss adjustment expenses	Insurance losses and loss adjustment expenses	89		74		147		137		Insurance losses and loss adjustment expenses	134		89		222		147

Other operating expenses	Other operating expenses	612		555		1,183		1,040		Other operating expenses	667		612		1,308		1,183
Total noninterest expense	Total noninterest expense	1,138		1,075		2,260		2,018		Total noninterest expense	1,249		1,138		2,515		2,260
Income from continuing operations before income tax expense	Income from continuing operations before income tax expense	634		1,042		1,480		2,049		Income from continuing operations before income tax expense	403		634		791		1,480
Income tax expense from continuing operations	Income tax expense from continuing operations	152		143		343		354		Income tax expense from continuing operations	74		152		142		343
Net income from continuing operations	Net income from continuing operations	482		899		1,137		1,695		Net income from continuing operations	329		482		649		1,137
Income from discontinued operations, net of tax		—		1		—		1
Loss from discontinued operations, net of tax										Loss from discontinued operations, net of tax	—		—		(1)		—
Net income	Net income	482		900		1,137		1,696		Net income	329		482		648		1,137
Other comprehensive (loss) income, net of tax	Other comprehensive (loss) income, net of tax	(1,218)		189		(2,851)		(415)		Other comprehensive (loss) income, net of tax	(87)		(1,218)		196		(2,851)
Comprehensive (loss) income		$	(736)	$	1,089	$	(1,714)	$	1,281
Comprehensive income (loss)										Comprehensive income (loss)	$	242	$	(736)	$	844	$	(1,714)

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,					Three months ended June 30,				Six months ended June 30,
($ in millions, except per share data; shares in thousands) (a)	($ in millions, except per share data; shares in thousands) (a)	2022		2021		2022		2021		($ in millions, except per share data; shares in thousands) (a)	2023		2022		2023		2022

Net income from continuing operations attributable to common stockholders	Net income from continuing operations attributable to common stockholders	$	454	$	899	$	1,081	$	1,695	Net income from continuing operations attributable to common stockholders	$	301	$	454	$	593	$	1,081
Income from discontinued operations, net of tax		—		1		—		1
Loss from discontinued operations, net of tax										Loss from discontinued operations, net of tax	—		—		(1)		—
Net income attributable to common stockholders	Net income attributable to common stockholders	$	454	$	900	$	1,081	$	1,696	Net income attributable to common stockholders	$	301	$	454	$	592	$	1,081
Basic weighted-average common shares outstanding (b)	Basic weighted-average common shares outstanding (b)	322,057		370,412		328,830		372,807		Basic weighted-average common shares outstanding (b)	303,684		322,057		303,173		328,830
Diluted weighted-average common shares outstanding (b)	Diluted weighted-average common shares outstanding (b)	324,027		373,029		330,882		375,265		Diluted weighted-average common shares outstanding (b)	304,646		324,027		304,050		330,882
Basic earnings per common share	Basic earnings per common share									Basic earnings per common share
Net income from continuing operations	Net income from continuing operations	$	1.41	$	2.43	$	3.29	$	4.55	Net income from continuing operations	$	0.99	$	1.41	$	1.96	$	3.29

Net income	Net income	$	1.41	$	2.43	$	3.29	$	4.55	Net income	$	0.99	$	1.41	$	1.95	$	3.29
Diluted earnings per common share	Diluted earnings per common share									Diluted earnings per common share
Net income from continuing operations	Net income from continuing operations	$	1.40	$	2.41	$	3.27	$	4.52	Net income from continuing operations	$	0.99	$	1.40	$	1.95	$	3.27

Net income	Net income	$	1.40	$	2.41	$	3.27	$	4.52	Net income	$	0.99	$	1.40	$	1.95	$	3.27
Cash dividends declared per common share	Cash dividends declared per common share	$	0.30	$	0.19	$	0.60	$	0.38	Cash dividends declared per common share	$	0.30	$	0.30	$	0.60	$	0.60

(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.

Refer to Note 1716 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) June 30, 2022 December 31, 2021
Assets
Cash and cash equivalents
Noninterest-bearing $ 801 $ 502
Interest-bearing 3,366 4,560
Total cash and cash equivalents 4,167 5,062
Equity securities 735 1,102
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) 1,112 1,170
Loans held-for-sale, net 798 549
Finance receivables and loans, net
Finance receivables and loans, net of unearned income 128,457 122,268
Allowance for loan losses (3,450) (3,267)
Total finance receivables and loans, net 125,007 119,001
Investment in operating leases, net 10,516 10,862
Premiums receivable and other insurance assets 2,743 2,724
Other assets 8,882 8,057
Total assets $ 185,703 $ 182,114
Liabilities
Deposit liabilities
Noninterest-bearing $ 185 $ 150
Interest-bearing 140,216 141,408
Total deposit liabilities 140,401 141,558
Short-term borrowings 7,775 —
Long-term debt 16,984 17,029
Interest payable 270 210
Unearned insurance premiums and service revenue 3,490 3,514
Accrued expenses and other liabilities 2,799 2,753
Total liabilities 171,719 165,064
Contingencies (refer to Note 24) 0 0
Equity
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 2,324 2,324
Accumulated deficit (721) (1,599)
Accumulated other comprehensive loss (3,009) (158)
Treasury stock, at cost (194,159,546 and 166,580,899 shares) (6,372) (5,188)
Total equity 13,984 17,050
Total liabilities and equity $ 185,703 $ 182,114

~~(a)Refer to Note 7 for discussion of investment securities pledged as collateral.~~



($ in millions, except share data)	June 30, 2023		December 31, 2022
Assets
Cash and cash equivalents
Noninterest-bearing	$	536	$	542
Interest-bearing	9,436		5,029
Total cash and cash equivalents	9,972		5,571
Equity securities	759		681
Available-for-sale securities (amortized cost of $33,809 and $34,863)	28,664		29,541
Held-to-maturity securities (fair value of $850 and $884)	1,030		1,062
Loans held-for-sale, net	297		654
Finance receivables and loans, net
Finance receivables and loans, net of unearned income	138,449		135,748
Allowance for loan losses	(3,781)		(3,711)
Total finance receivables and loans, net	134,668		132,037
Investment in operating leases, net	9,930		10,444
Premiums receivable and other insurance assets	2,768		2,698
Other assets	9,153		9,138
Total assets	$	197,241	$	191,826
Liabilities
Deposit liabilities
Noninterest-bearing	$	160	$	185
Interest-bearing	154,150		152,112
Total deposit liabilities	154,310		152,297
Short-term borrowings	2,194		2,399
Long-term debt	20,141		17,762
Interest payable	955		408
Unearned insurance premiums and service revenue	3,478		3,453
Accrued expenses and other liabilities	2,631		2,648
Total liabilities	183,709		178,967
Contingencies (refer to Note 23)
Equity
Common stock and paid-in capital ($0.01 par value, shares authorized 1,100,000,000; issued 510,870,696 and 507,682,838; and outstanding 301,618,768 and 299,324,357)	21,915		21,816
Preferred stock	2,324		2,324
Retained earnings (accumulated deficit)	23		(384)
Accumulated other comprehensive loss	(3,863)		(4,059)
Treasury stock, at cost (209,251,928 and 208,358,481 shares)	(6,867)		(6,838)
Total equity	13,532		12,859
Total liabilities and equity	$	197,241	$	191,826

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) June 30, 2022 December 31, 2021
Assets
Finance receivables and loans, net
Consumer automotive $ 7,725 $ 6,871
Consumer other (a) — 353
Allowance for loan losses (264) (278)
Total finance receivables and loans, net 7,461 6,946
Other assets 546 563
Total assets $ 8,007 $ 7,509
Liabilities
Long-term debt $ 1,500 $ 1,337
Accrued expenses and other liabilities 2 2
Total liabilities $ 1,502 $ 1,339

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



($ in millions)	June 30, 2023		December 31, 2022
Assets
Finance receivables and loans, net
Consumer automotive	$	9,928	$	9,547


Allowance for loan losses	(361)		(336)
Total finance receivables and loans, net	9,567		9,211

Other assets	652		645
Total assets	$	10,219	$	9,856
Liabilities
Long-term debt	$	2,710	$	2,436
Accrued expenses and other liabilities	6		5
Total liabilities	$	2,716	$	2,441

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,													Three months ended June 30,
($ in millions)	($ in millions)	Common stock and paid-in capital		Preferred stock		Accumulated deficit		Accumulated other comprehensive income (loss)		Treasury stock		Total equity		($ in millions)	Common stock and paid-in capital		Preferred stock		Retained earnings (accumulated deficit)		Accumulated other comprehensive 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	Balance at April 1, 2022	$	21,728	$	2,324	$	(1,076)	$	(1,791)	$	(5,772)	$	15,413	Balance at April 1, 2022	$	21,728	$	2,324	$	(1,076)	$	(1,791)	$	(5,772)	$	15,413
Net income	Net income					482						482		Net income					482						482

Preferred stock dividends — Series B	Preferred stock dividends — Series B					(16)						(16)		Preferred stock dividends — Series B					(16)						(16)
Preferred stock dividends — Series C	Preferred stock dividends — Series C					(12)						(12)		Preferred stock dividends — Series C					(12)						(12)
Share-based compensation	Share-based compensation	34										34		Share-based compensation	34										34
Other comprehensive loss	Other comprehensive loss							(1,218)				(1,218)		Other comprehensive loss							(1,218)				(1,218)
Common stock repurchases	Common stock repurchases									(600)		(600)		Common stock repurchases									(600)		(600)
Common stock dividends ($0.30 per share)	Common stock dividends ($0.30 per share)					(99)						(99)		Common stock dividends ($0.30 per share)					(99)						(99)
Balance at June 30, 2022	Balance at June 30, 2022	$	21,762	$	2,324	$	(721)	$	(3,009)	$	(6,372)	$	13,984	Balance at June 30, 2022	$	21,762	$	2,324	$	(721)	$	(3,009)	$	(6,372)	$	13,984
Balance at April 1, 2023														Balance at April 1, 2023	$	21,880	$	2,324	$	(185)	$	(3,776)	$	(6,865)	$	13,378
Net income														Net income					329						329

Preferred stock dividends — Series B														Preferred stock dividends — Series B					(16)						(16)
Preferred stock dividends — Series C														Preferred stock dividends — Series C					(12)						(12)
Share-based compensation														Share-based compensation	35										35
Other comprehensive loss														Other comprehensive loss							(87)				(87)
Common stock repurchases														Common stock repurchases									(2)		(2)
Common stock dividends ($0.30 per share)														Common stock dividends ($0.30 per share)					(93)						(93)
Balance at June 30, 2023														Balance at June 30, 2023	$	21,915	$	2,324	$	23	$	(3,863)	$	(6,867)	$	13,532

~~Statement continues on the next page.~~


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










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
Balance at January 1, 2023	$	21,816	$	2,324	$	(384)	$	(4,059)	$	(6,838)	$	12,859
Net income					648						648


Preferred stock dividends — Series B					(32)						(32)
Preferred stock dividends — Series C					(24)						(24)
Share-based compensation	99										99
Other comprehensive income							196				196
Common stock repurchases									(29)		(29)
Common stock dividends ($0.60 per share)					(185)						(185)
Balance at June 30, 2023	$	21,915	$	2,324	$	23	$	(3,863)	$	(6,867)	$	13,532

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)	2022		2021		Six months ended June 30, ($ in millions)	2023		2022
Operating activities	Operating activities					Operating activities
Net income	Net income	$	1,137	$	1,696	Net income	$	648	$	1,137
Reconciliation of net income to net cash provided by operating activities	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	666		640		Depreciation and amortization	613		666

Provision for credit losses	Provision for credit losses	471		(45)		Provision for credit losses	873		471
Gain on mortgage and automotive loans, net	Gain on mortgage and automotive loans, net	(18)		(55)		Gain on mortgage and automotive loans, net	(9)		(18)
Other (loss) gain on investments, net		119		(188)
Loss on extinguishment of debt		—		74
Other (gain) loss on investments, net						Other (gain) loss on investments, net	(100)		119

Originations and purchases of loans held-for-sale	Originations and purchases of loans held-for-sale	(2,484)		(2,154)		Originations and purchases of loans held-for-sale	(1,327)		(2,484)
Proceeds from sales and repayments of loans held-for-sale	Proceeds from sales and repayments of loans held-for-sale	2,277		2,230		Proceeds from sales and repayments of loans held-for-sale	1,660		2,277

Net change in	Net change in					Net change in

Deferred income taxes	Deferred income taxes	331		(675)		Deferred income taxes	53		331
Interest payable	Interest payable	60		(48)		Interest payable	547		60
Other assets	Other assets	912		2		Other assets	30		912
Other liabilities	Other liabilities	(19)		231		Other liabilities	(42)		(19)
Other, net	Other, net	20		(86)		Other, net	74		20
Net cash provided by operating activities	Net cash provided by operating activities	3,472		1,622		Net cash provided by operating activities	3,020		3,472
Investing activities	Investing activities					Investing activities

Purchases of equity securities	Purchases of equity securities	(499)		(724)		Purchases of equity securities	(102)		(499)
Proceeds from sales of equity securities	Proceeds from sales of equity securities	720		944		Proceeds from sales of equity securities	127		720
Purchases of available-for-sale securities	Purchases of available-for-sale securities	(5,495)		(14,376)		Purchases of available-for-sale securities	(285)		(5,495)
Proceeds from sales of available-for-sale securities	Proceeds from sales of available-for-sale securities	716		2,788		Proceeds from sales of available-for-sale securities	333		716
Proceeds from repayments of available-for-sale securities	Proceeds from repayments of available-for-sale securities	2,675		6,539		Proceeds from repayments of available-for-sale securities	1,024		2,675
Purchases of held-to-maturity securities	Purchases of held-to-maturity securities	(47)		(97)		Purchases of held-to-maturity securities	—		(47)
Proceeds from repayments of held-to-maturity securities	Proceeds from repayments of held-to-maturity securities	105		223		Proceeds from repayments of held-to-maturity securities	32		105
Purchases of finance receivables and loans held-for-investment	Purchases of finance receivables and loans held-for-investment	(3,838)		(3,500)		Purchases of finance receivables and loans held-for-investment	(2,035)		(3,838)
Proceeds from sales of finance receivables and loans initially held-for-investment	Proceeds from sales of finance receivables and loans initially held-for-investment	3		376		Proceeds from sales of finance receivables and loans initially held-for-investment	9		3
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	(3,141)		9,095		Originations and repayments of finance receivables and loans held-for-investment and other, net	(1,368)		(3,141)
Purchases of operating lease assets	Purchases of operating lease assets	(1,799)		(3,026)		Purchases of operating lease assets	(1,501)		(1,799)
Disposals of operating lease assets	Disposals of operating lease assets	1,716		1,775		Disposals of operating lease assets	1,580		1,716

Net change in nonmarketable equity investments	Net change in nonmarketable equity investments	(246)		93		Net change in nonmarketable equity investments	(39)		(246)
Other, net	Other, net	(305)		(201)		Other, net	(255)		(305)
Net cash used in investing activities	Net cash used in investing activities	(9,435)		(91)		Net cash used in investing activities	(2,480)		(9,435)

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.

1110

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)	2022		2021		Six months ended June 30, ($ in millions)	2023		2022
Financing activities	Financing activities					Financing activities
Net change in short-term borrowings	Net change in short-term borrowings	7,775		(2,136)		Net change in short-term borrowings	(205)		7,775
Net (decrease) increase in deposits		(1,159)		2,060
Net increase (decrease) in deposits						Net increase (decrease) in deposits	2,003		(1,159)
Proceeds from issuance of long-term debt	Proceeds from issuance of long-term debt	4,216		194		Proceeds from issuance of long-term debt	4,051		4,216
Repayments of long-term debt	Repayments of long-term debt	(4,292)		(3,800)		Repayments of long-term debt	(1,704)		(4,292)

Purchases of land and buildings in satisfaction of finance lease liabilities	Purchases of land and buildings in satisfaction of finance lease liabilities	(44)		—		Purchases of land and buildings in satisfaction of finance lease liabilities	—		(44)
Repurchases of common stock	Repurchases of common stock	(1,184)		(721)		Repurchases of common stock	(29)		(1,184)
Preferred stock issuance		—		2,326
Trust preferred securities redemption		—		(1,442)

Common stock dividends paid	Common stock dividends paid	(203)		(144)		Common stock dividends paid	(187)		(203)
Preferred stock dividends paid	Preferred stock dividends paid	(56)		—		Preferred stock dividends paid	(56)		(56)
Net cash provided by (used in) financing activities		5,053		(3,663)
Net cash provided by financing activities						Net cash provided by financing activities	3,873		5,053
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	(1)		3		Effect of exchange-rate changes on cash and cash equivalents and restricted cash	3		(1)
Net decrease in cash and cash equivalents and restricted cash		(911)		(2,129)
Net increase (decrease) in cash and cash equivalents and restricted cash						Net increase (decrease) in cash and cash equivalents and restricted cash	4,416		(911)
Cash and cash equivalents and restricted cash at beginning of year	Cash and cash equivalents and restricted cash at beginning of year	5,670		16,574		Cash and cash equivalents and restricted cash at beginning of year	6,222		5,670
Cash and cash equivalents and restricted cash at June 30,	Cash and cash equivalents and restricted cash at June 30,	$	4,759	$	14,445	Cash and cash equivalents and restricted cash at June 30,	$	10,638	$	4,759
Supplemental disclosures	Supplemental disclosures					Supplemental disclosures
Cash paid (received) for	Cash paid (received) for					Cash paid (received) for
Interest	Interest	$	772	$	1,057	Interest	$	2,548	$	772
Income taxes	Income taxes	(429)		1,212		Income taxes	(71)		(429)
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	25		5		Loans held-for-sale transferred to finance receivables and loans held-for-investment	208		25
Additions of property and equipment		—		46
Finance receivables and loans held-for-investment transferred to loans held-for-sale		—		414

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)	2022		2021		June 30, ($ in millions)	2023		2022
Cash and cash equivalents on the Condensed Consolidated Balance Sheet	Cash and cash equivalents on the Condensed Consolidated Balance Sheet	$	4,167	$	13,664	Cash and cash equivalents on the Condensed Consolidated Balance Sheet	$	9,972	$	4,167
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)	592		781		Restricted cash included in other assets on the Condensed Consolidated Balance Sheet (a)	666		592
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	$	4,759	$	14,445	Total cash and cash equivalents and restricted cash in the Condensed Consolidated Statement of Cash Flows	$	10,638	$	4,759

(a)Restricted cash balances relate primarily to our securitization arrangements. Refer to Note 1110 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.

1211

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~~with the nation’s largest all-digital bank and an industry-leading automotive financing and insurance business, driven by a mission to “Do It Right” and be a relentless ally for ~~its consumer, commercial,~~customers and ~~corporate customers. Ally is composed~~communities. The Company serves customers through a full range 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~~online banking services (including deposits, mortgage lending, point-of-sale personal lending and ~~a variety of deposit and other banking~~credit-card 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~~The Company also includes a corporate finance business that offers capital for equity sponsors and middle-market companies. Ally is a Delaware corporation and ~~are~~is 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 U.S. 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, ~~2022,~~2023, and for the three months and six months ended June 30, ~~2022,~~2023, and ~~2021,~~2022, 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, ~~2021,~~2022, as filed on February ~~25, 2022,~~24, 2023, with the SEC.

Significant Accounting Policies

Finance Receivables and Loans

On January 1, 2023, we implemented ASU 2022-02, Financial Instruments—Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures. This guidance eliminates the concept of TDRs and adds new disclosure requirements related to loan modifications to borrowers experiencing financial difficulty and gross charge-offs. We implemented the ASU on a prospective basis, which results in certain aspects of our accounting policies changing for the current year. For significant accounting policy information related to the accounting and reporting of TDRs, for which comparative period information is presented, refer to Note 1 to the Consolidated Financial Statements in our 2022 Annual Report on Form 10-K.

Modifications of Loans with Borrowers Experiencing Financial Difficulty

We may provide a modification to a borrower who is experiencing financial difficulty if we believe they have the ability and are willing to repay their loan. The type of modification granted will vary depending on our credit risk management practices, as well as the borrower’s financial condition and the characteristics of the loan, including the unpaid balance, the underlying collateral, and the number or types of previous modifications granted. Modifications that we make subject to these requirements include payment extensions, principal forgiveness, and/or interest rate concessions. These modifications generally reduce the borrower’s periodic payment amount. The following is a description of each of these types of modifications.

•Payment extensions — Payment extensions include both payment deferrals and contractual maturity extensions. Deferral arrangements allow borrowers to delay a scheduled loan payment to a later date. Deferred loan payments do not affect the original contractual terms of the loan and the contractual maturity date of the loan remains unchanged. Deferrals also include certain forbearance agreements. Within the commercial loan portfolio, deferrals primarily reflect a deferral of interest payments. Under a contractual maturity extension agreement, the last payment date is extended to a future date, contractually lengthening the remaining term of the original loan.

•Principal forgiveness — Under principal forgiveness, the outstanding principal balance of a loan is reduced by a specified amount. Principal forgiveness may occur voluntarily as part of a negotiated agreement with a borrower, or involuntarily through a bankruptcy proceeding. Under these involuntary instances, the bankruptcy court in a Chapter 11 or 13 proceeding may order us to reduce the outstanding principal balance of the loan to a specified amount.

•Interest rate concessions — Interest rate concessions adjust the contractual interest rate of the loan to a rate that is not consistent with a market rate for a customer with similar credit risk.

•Combination — Combination includes loans that have undergone multiple of the above loan modification types. This primarily includes rewritten loans where we grant an interest rate concession and a contractual maturity extension.

Table of Contents

Notes to Condensed Consolidated Financial Statements (unaudited)

Ally Financial Inc. • Form 10-Q

Significant judgment is required to determine if a borrower is experiencing financial difficulty. These considerations vary by portfolio class. In all cases, the cumulative impacts of all modifications made within the 12-month period before the current modification are considered at the time of the most recent modification.

For consumer loans of all classes, various qualitative factors are used for assessing the financial difficulty of the borrower. These factors include, but are not limited to, the borrower’s default status on any of its debts, bankruptcy, and recent changes in financial circumstances (for instance, loss of employment). For commercial loans of all classes, similar qualitative factors are considered when assessing the financial difficulty of the borrower. In addition to the previously noted factors, consideration is also given to the borrower’s forecasted ability to service the debt in accordance with the contractual terms, possible regulatory actions, and other potential business disruptions (for example, the loss of a significant customer or other revenue stream).

In our consumer automotive portfolio class of loans, we also provide extensions or deferrals of payments to borrowers whom we deem to be experiencing only temporary financial difficulty. In these cases, there are limits within our operational policies to minimize the number of times a loan can be extended, as well as limits to the length of each extension, including a cumulative cap over the life of the loan. If these limits are breached, the modification may require disclosure as noted in the following paragraph. Before offering an extension or deferral, we evaluate the capacity of the customer to make the scheduled payments after the deferral period. During the deferral period, we continue to accrue interest on the loan as part of the deferral agreement. We grant these extensions or deferrals when we expect to collect all amounts due including interest accrued at the original contract rate.

We do not disclose modifications that result in only an insignificant payment delay. In order to assess whether a payment delay is insignificant, we consider the amount of the modified payments subject to delay in conjunction with the unpaid principal balance or the collateral value of the loan, whether or not the delay is significant with respect to the frequency of payments under the original contract, or the loan’s original expected duration. In the cases where payment extensions cumulatively extend beyond 90 days and are more than 10% of the original contractual term, or where the cumulative payment extension within the 12-month period immediately preceding the current modification is beyond 180 days, we deem the delay in payment to be more than insignificant.

The financial impacts of modifications that meet the definition of a modification to borrowers experiencing financial difficulty are reported in the period in which they are identified. Additionally, if such a loan defaults within 12 months of the modification, we are required to disclose the instances of redefault. For the purpose of this disclosure, we have determined that a loan is considered to have redefaulted when the loan meets the requirements for evaluation under our charge-off policy, except for commercial loans where redefault is defined as 90 days past due.

Nonaccrual Loans

Generally, we recognize loans of all classes as past due when they are 30 days delinquent on making a contractually required payment, and loans are placed on nonaccrual status when principal or interest has been delinquent for at least 90 days, or when full collection is not expected. Interest income recognition is suspended when finance receivables and loans are placed on nonaccrual status. Additionally, amortization of premiums and discounts and deferred fees and costs ceases when finance receivables and loans are placed on nonaccrual status. Exceptions include commercial real estate loans that are placed on nonaccrual status when delinquent for 60 days or when full collection is not probable, if sooner. Additionally, a loan can be returned to accrual status when the loan has been brought fully current, the collection of contractual principal and interest is reasonably assured, and six consecutive months of repayment performance is achieved. In certain cases, if a borrower has been current up to the time of the modification and repayment of the debt subsequent to the modification is reasonably assured, we may choose to continue to accrue interest on the loan.

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 ~~2021~~2022 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 ~~2021~~2022 Annual Report on Form 10-K regarding additional significant accounting policies.

Table of Contents

Notes to Condensed Consolidated Financial Statements (unaudited)

Ally Financial Inc. • Form 10-Q

Recently ~~Issued~~Adopted Accounting Standards

~~Fair Value Hedging—Portfolio Layer Method (ASU 2022-01)~~

~~In March 2022, the FASB issued ASU 2022-01,~~ ~~Derivatives and Hedging (Topic 815): Fair Value Hedging—Portfolio Layer Method~~. 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, both prepayable and nonprepayable financial assets may be included in 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 effective on January 1, 2023, with early adoption permitted. The amendments must be applied using a prospective approach and will not have a material impact upon adoption. Management is currently evaluating whether to 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 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~~added 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~~We adopted the ASU on January 1, 2023, ~~with early adoption permitted. The amendments must be applied using~~on 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 thebasis. The impact of these ~~amendments.~~amendments was not material.

~~Table of Contents~~

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

~~Ally Financial Inc. • Form 10-Q~~

Recently Issued Accounting Standards

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.

Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method (ASU 2023-02)

~~2. Acquisitions~~

~~On December 1, 2021, we acquired 100%~~In March 2023, the FASB issued ASU 2023-02, Investments—Equity Method and Joint Ventures (Topic 323): Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method. The purpose of this guidance is to expand the use of the proportional amortization method to certain tax equity investments made primarily for the purpose of ~~Fair Square Financial Holdings LLC~~receiving income tax credits and ~~its subsidiaries, including Fair Square Financial LLC (collectively, Fair Square)~~other income tax benefits. In order to qualify for ~~$741 million in cash. Fair Square, which we rebranded Ally Credit Card,~~the proportional amortization method, the following five conditions must be met: (1) it is probable that the income tax credits allocable to the tax equity investor will be available, (2) the tax equity investor does not have the ability to exercise significant influence over the operating and financial policies of the underlying project, (3) substantially all of the projected benefits are from income tax credits and other income tax benefits, (4) the tax equity investor’s projected yield is based solely on the cash flows from the income tax credits and other income tax benefits is positive, and (5) the tax equity investor is a ~~digital-first, nonbank credit-card company that operates~~limited liability investor in the ~~United States. Fair Square operates as~~limited liability entity for both legal and tax purposes, and the tax equity investor’s liability is limited to its capital investment. Selecting the proportional amortization method will be an accounting policy election that must be applied on a ~~wholly owned subsidiary of Ally. We applied~~tax-credit-program-by-tax-credit-program basis rather than at the ~~acquisition~~entity level or to individual investments. Additionally, in order to apply the proportional amortization method ofto qualifying investments, an entity must use the flow-through method when accounting ~~to this transaction, which generally requires~~for the ~~initial recognition of assets acquired, including identifiable intangible assets, and liabilities assumed at their respective fair value. Goodwill is recognized as the excess~~receipt of the ~~acquisition price after~~investment tax credits. This guidance also adds disclosure requirements related to tax credit programs where the ~~recognition~~proportional amortization method has been elected. The amendments are effective on January 1, 2024, with early adoption permitted. The amendments must be applied using either a modified retrospective or retrospective approach with any adjustments from the adoption of the ~~net assets, including~~amendments recognized in retained earnings and disclosed upon adoption. In the ~~identifiable intangible assets. Beginning in December 2021, financial information related~~event that we elect to ~~Fair Square~~apply the proportional amortization method to any qualifying programs upon adoption, management is ~~included within Corporate and Other.~~

~~The following table summarizes~~still assessing the ~~allocation~~total impacts of ~~cash consideration paid for Fair Square and~~these amendments, but does not expect the ~~amounts~~impact 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 expectedamendments 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.~~material.

3.2. Revenue from Contracts with Customers

Our primary revenue sources, which include financing revenue and other interest income, are addressed by other U.S. GAAP topics 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 U.S. GAAP topics 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 ~~2021~~2022 Annual Report on Form 10-K.


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
2023														2023
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)	$	—	$	163	$	—	$	—	$	—	$	163	Noninsurance contracts (a) (b) (c)	$	—	$	171	$	—	$	—	$	—	$	171
Remarketing fee income	Remarketing fee income	29		—		—		—		—		29		Remarketing fee income	31		—		—		—		—		31
Brokerage commissions and other revenue	Brokerage commissions and other revenue	—		—		—		—		13		13		Brokerage commissions and other revenue	—		—		—		—		23		23
Banking fees and interchange income (d) (e)		—		—		—		—		10		10
Banking fees and interchange income (d)														Banking fees and interchange income (d)	—		—		—		—		11		11
Brokered/agent commissions	Brokered/agent commissions	—		4		—		—		—		4		Brokered/agent commissions	—		4		—		—		—		4
Other	Other	6		—		—		—		1		7		Other	5		—		—		—		—		5
Total revenue from contracts with customers	Total revenue from contracts with customers	35		167		—		—		24		226		Total revenue from contracts with customers	36		175		—		—		34		245
All other revenue	All other revenue	37		(9)		4		19		35		86		All other revenue	47		162		5		28		19		261
Total other revenue ~~(f)~~(e)	Total other revenue ~~(f)~~(e)	$	72	$	158	$	4	$	19	$	59	$	312	Total other revenue ~~(f)~~(e)	$	83	$	337	$	5	$	28	$	53	$	506
2021
2022														2022
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)	$	—	$	158	$	—	$	—	$	—	$	158	Noninsurance contracts (a) (b) (c)	$	—	$	163	$	—	$	—	$	—	$	163
Remarketing fee income	Remarketing fee income	27		—		—		—		—		27		Remarketing fee income	29		—		—		—		—		29
Brokerage commissions and other revenue	Brokerage commissions and other revenue	—		—		—		—		13		13		Brokerage commissions and other revenue	—		—		—		—		13		13
Banking fees and interchange income (d)	Banking fees and interchange income (d)	—		—		—		—		5		5		Banking fees and interchange income (d)	—		—		—		—		10		10
Brokered/agent commissions	Brokered/agent commissions	—		4		—		—		—		4		Brokered/agent commissions	—		4		—		—		—		4
Other	Other	6		—		—		—		2		8		Other	6		—		—		—		1		7
Total revenue from contracts with customers	Total revenue from contracts with customers	33		162		—		—		20		215		Total revenue from contracts with customers	35		167		—		—		24		226
All other revenue	All other revenue	28		182		22		33		58		323		All other revenue	37		(9)		4		19		35		86
Total other revenue ~~(f)~~(e)	Total other revenue ~~(f)~~(e)	$	61	$	344	$	22	$	33	$	78	$	538	Total other revenue ~~(f)~~(e)	$	72	$	158	$	4	$	19	$	59	$	312

(a)We had opening balances of $3.0 billion in unearned revenue associated with outstanding contracts at both April 1, 2023, and 2022, and ~~2021,~~$243 million and $234 ~~million and $228~~ 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, ~~2022,~~2023, and ~~2021,~~2022, respectively.

(b)At June 30, ~~2022,~~2023, we had unearned revenue of $3.0 billion associated with outstanding contracts, and with respect to this balance we expect to recognize revenue of ~~$443~~$464 million during the remainder of ~~2022, $825 million in~~ 2023, ~~$681~~$812 million in 2024, ~~$488~~$644 million in 2025, $467 million in 2026, and ~~$580~~$582 million thereafter. At June 30, ~~2021,~~2022, we had unearned revenue of ~~$3.1~~$3.0 billion associated with outstanding contracts.

(c)We had deferred insurance assets of $1.8 billion at both April 1, 2023, and June 30, 2023, and recognized $144 million of expense during the three months ended June 30, 2023. 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.

(d)~~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 $5 million and $3 million for the three months ended June 30, ~~2022.~~2023, and 2022, respectively.

~~(f)~~(e)Represents a component of total net revenue. Refer to Note 2322 for further information on our reportable operating segments.

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
2023														2023
Revenue from contracts with customers	Revenue from contracts with customers													Revenue from contracts with customers
Noninsurance contracts (a) (b)	Noninsurance contracts (a) (b)	$	—	$	325	$	—	$	—	$	—	$	325	Noninsurance contracts (a) (b)	$	—	$	340	$	—	$	—	$	—	$	340
Remarketing fee income	Remarketing fee income	56		—		—		—		—		56		Remarketing fee income	64		—		—		—		—		64
Brokerage commissions and other revenue	Brokerage commissions and other revenue	—		—		—		—		24		24		Brokerage commissions and other revenue	—		—		—		—		46		46
Banking fees and interchange income (c) (d)		—		—		—		—		21		21
Banking fees and interchange income (c)														Banking fees and interchange income (c)	—		—		—		—		21		21
Brokered/agent commissions	Brokered/agent commissions	—		8		—		—		—		8		Brokered/agent commissions	—		7		—		—		—		7
Other	Other	11		—		—		—		2		13		Other	10		—		—		—		—		10
Total revenue from contracts with customers	Total revenue from contracts with customers	67		333		—		—		47		447		Total revenue from contracts with customers	74		347		—		—		67		488
All other revenue	All other revenue	73		95		18		43		78		307		All other revenue	86		371		9		57		(7)		516
Total other revenue ~~(e)~~(d)	Total other revenue ~~(e)~~(d)	$	140	$	428	$	18	$	43	$	125	$	754	Total other revenue ~~(e)~~(d)	$	160	$	718	$	9	$	57	$	60	$	1,004
2021
2022														2022
Revenue from contracts with customers	Revenue from contracts with customers													Revenue from contracts with customers
Noninsurance contracts (a) (b)	Noninsurance contracts (a) (b)	$	—	$	313	$	—	$	—	$	—	$	313	Noninsurance contracts (a) (b)	$	—	$	325	$	—	$	—	$	—	$	325
Remarketing fee income	Remarketing fee income	54		—		—		—		—		54		Remarketing fee income	56		—		—		—		—		56
Brokerage commissions and other revenue	Brokerage commissions and other revenue	—		—		—		—		33		33		Brokerage commissions and other revenue	—		—		—		—		24		24
Banking fees and interchange income (c)	Banking fees and interchange income (c)	—		—		—		—		11		11		Banking fees and interchange income (c)	—		—		—		—		21		21
Brokered/agent commissions	Brokered/agent commissions	—		8		—		—		—		8		Brokered/agent commissions	—		8		—		—		—		8
Other	Other	12		—		—		—		2		14		Other	11		—		—		—		2		13
Total revenue from contracts with customers	Total revenue from contracts with customers	66		321		—		—		46		433		Total revenue from contracts with customers	67		333		—		—		47		447
All other revenue	All other revenue	57		402		62		59		90		670		All other revenue	73		95		18		43		78		307
Total other revenue ~~(e)~~(d)	Total other revenue ~~(e)~~(d)	$	123	$	723	$	62	$	59	$	136	$	1,103	Total other revenue ~~(e)~~(d)	$	140	$	428	$	18	$	43	$	125	$	754

(a)We had opening balances of ~~$3.1~~$3.0 billion and ~~$3.0~~$3.1 billion in unearned revenue associated with outstanding contracts at January 1, ~~2022,~~2023, and ~~2021,~~2022, respectively, and ~~$465~~$484 million and ~~$453~~$465 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,~~2023, and ~~2021,~~2022, respectively.

(b)We had deferred insurance assets of $1.8 billion at both January 1, 2023, and June 30, 2023, and recognized $288 million of expense during the six months ended June 30, 2023. We had deferred insurance assets of $1.9 billion and $1.8 billion at January 1, 2022, and June 30, 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.

(c)~~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 $9 million and $6 million for the six months ended June 30, ~~2022.~~2023, and 2022, respectively.

~~(e)~~(d)Represents a component of total net revenue. Refer to Note 2322 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 ~~$50~~$70 million and ~~$100~~$117 million for the three months and six months ended June 30, ~~2022,~~2023, respectively,compared to ~~$128~~$50 million and ~~$192~~$100 million for the same periods in ~~2021,~~2022, on the sale of off-lease vehicles. These gains are included in depreciation expense on operating lease assets in our Condensed Consolidated Statement of Comprehensive Income.

4.3. 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)	2022		2021		2022		2021		($ in millions)	2023		2022		2023		2022
Late charges and other administrative fees	Late charges and other administrative fees	$	38	$	29	$	75	$	60	Late charges and other administrative fees	$	48	$	38	$	95	$	75
Remarketing fees	Remarketing fees	29		27		56		54		Remarketing fees	31		29		64		56
Income from equity-method investments		25		31		45		45
Gain on nonmarketable equity investments, net		3		99		2		103
Income (loss) from equity-method investments (a)										Income (loss) from equity-method investments (a)	15		25		(3)		45
Gain (loss) on nonmarketable equity investments, net (a)										Gain (loss) on nonmarketable equity investments, net (a)	—		3		(11)		2

Other, net	Other, net	57		63		117		114		Other, net	71		57		134		117
Total other income, net of losses	Total other income, net of losses	$	152	$	249	$	295	$	376	Total other income, net of losses	$	165	$	152	$	279	$	295

(a)Refer to Note 10 for further information on our nonmarketable equity investments and equity-method investments.

Table of Contents

Notes to Condensed Consolidated Financial Statements (unaudited)

Ally Financial Inc. • Form 10-Q

5.4. 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)	2022		2021		($ in millions)	2023		2022
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,	$	122	$	129	Total gross reserves for insurance losses and loss adjustment expenses at January 1,	$	119	$	122
Less: Reinsurance recoverable	Less: Reinsurance recoverable	81		90		Less: Reinsurance recoverable	72		81
Net reserves for insurance losses and loss adjustment expenses at January 1,	Net reserves for insurance losses and loss adjustment expenses at January 1,	41		39		Net reserves for insurance losses and loss adjustment expenses at January 1,	47		41
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	151		136		Current year	218		151
Prior years (a)	Prior years (a)	(4)		1		Prior years (a)	4		(4)
Total net insurance losses and loss adjustment expenses incurred	Total net insurance losses and loss adjustment expenses incurred	147		137		Total net insurance losses and loss adjustment expenses incurred	222		147
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	(114)		(108)		Current year	(154)		(114)
Prior years	Prior years	(24)		(27)		Prior years	(35)		(24)
Total net insurance losses and loss adjustment expenses paid or payable	Total net insurance losses and loss adjustment expenses paid or payable	(138)		(135)		Total net insurance losses and loss adjustment expenses paid or payable	(189)		(138)

Net reserves for insurance losses and loss adjustment expenses at June 30,	Net reserves for insurance losses and loss adjustment expenses at June 30,	50		41		Net reserves for insurance losses and loss adjustment expenses at June 30,	80		50
Plus: Reinsurance recoverable	Plus: Reinsurance recoverable	81		85		Plus: Reinsurance recoverable	72		81
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,	$	131	$	126	Total gross reserves for insurance losses and loss adjustment expenses at June 30,	$	152	$	131

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

6.5. 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)	2022		2021		2022		2021		($ in millions)	2023		2022		2023		2022
Insurance commissions	Insurance commissions	$	151	$	138	$	300	$	274	Insurance commissions	$	158	$	151	$	315	$	300
Technology and communications	Technology and communications	100		81		197		159		Technology and communications	111		100		219		197
Advertising and marketing	Advertising and marketing	77		45		149		86		Advertising and marketing	79		77		157		149
Lease and loan administration	Lease and loan administration	54		57		105		112		Lease and loan administration	53		54		101		105
Professional services		47		28		90		61
Property and equipment depreciation	Property and equipment depreciation	41		38		80		74		Property and equipment depreciation	48		41		95		80
Regulatory and licensing fees	Regulatory and licensing fees	22		17		48		35		Regulatory and licensing fees	39		22		74		48
Professional services										Professional services	36		47		68		90
Vehicle remarketing and repossession	Vehicle remarketing and repossession	22		17		42		38		Vehicle remarketing and repossession	28		22		55		42
Amortization of intangible assets (a)	Amortization of intangible assets (a)	8		4		16		9		Amortization of intangible assets (a)	6		8		13		16
Charitable contributions (b)		6		54		7		55

Other	Other	84		76		149		137		Other	109		90		211		156
Total other operating expenses	Total other operating expenses	$	612	$	555	$	1,183	$	1,040	Total other operating expenses	$	667	$	612	$	1,308	$	1,183

(a)Refer to Note 1110 for further information on our intangible assets.

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

Table of Contents

Notes to Condensed Consolidated Financial Statements (unaudited)

Ally Financial Inc. • Form 10-Q

7.6. 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, 2022								December 31, 2021									June 30, 2023								December 31, 2022
		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	$	2,561	$	—	$	(187)	$	2,374	$	2,173	$	2	$	(20)	$	2,155	U.S. Treasury and federal agencies	$	2,277	$	—	$	(248)	$	2,029	$	2,272	$	—	$	(256)	$	2,016
U.S. States and political subdivisions	U.S. States and political subdivisions	859		1		(72)		788		841		27		(4)		864		U.S. States and political subdivisions	746		—		(81)		665		841		1		(82)		760
Foreign government	Foreign government	161		—		(12)		149		157		2		(2)		157		Foreign government	180		—		(12)		168		158		—		(12)		146
Agency mortgage-backed residential(a)	Agency mortgage-backed residential(a)	19,956		1		(2,098)		17,859		19,044		219		(224)		19,039		Agency mortgage-backed residential(a)	18,808		—		(2,952)		15,856		19,668		3		(3,038)		16,633
Mortgage-backed residential	Mortgage-backed residential	5,249		—		(595)		4,654		4,448		11		(34)		4,425		Mortgage-backed residential	4,961		—		(818)		4,143		5,154		—		(855)		4,299
Agency mortgage-backed commercial(a)	Agency mortgage-backed commercial(a)	4,343		3		(616)		3,730		4,573		66		(113)		4,526		Agency mortgage-backed commercial(a)	4,499		—		(815)		3,684		4,380		—		(845)		3,535

Asset-backed	Asset-backed	496		—		(21)		475		536		1		(3)		534		Asset-backed	404		—		(21)		383		459		—		(26)		433
Corporate debt	Corporate debt	1,896		—		(182)		1,714		1,878		30		(21)		1,887		Corporate debt	1,934		1		(199)		1,736		1,931		1		(213)		1,719
Total available-for-sale securities (a) (b) (c) (d) (e)		$	35,521	$	5	$	(3,783)	$	31,743	$	33,650	$	358	$	(421)	$	33,587
Total available-for-sale securities (b) (c) (d) (e) (f)																		Total available-for-sale securities (b) (c) (d) (e) (f)	$	33,809	$	1	$	(5,146)	$	28,664	$	34,863	$	5	$	(5,327)	$	29,541

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	$	1,112	$	—	$	(114)	$	998	$	1,170	$	48	$	(14)	$	1,204	Agency mortgage-backed residential	$	1,030	$	—	$	(180)	$	850	$	1,062	$	—	$	(178)	$	884

Total held-to-maturity securities (e) (f)		$	1,112	$	—	$	(114)	$	998	$	1,170	$	48	$	(14)	$	1,204
Total held-to-maturity securities (f) (g)																		Total held-to-maturity securities (f) (g)	$	1,030	$	—	$	(180)	$	850	$	1,062	$	—	$	(178)	$	884

(a)Fair value includes a $75 million liability and a $12 million liability for agency mortgage-backed residential securities and an $11 million liability and $15 million asset for agency mortgage-backed commercial securities related to basis adjustments for securities in closed portfolios with active hedges under the portfolio layer method at June 30, 2023, and December 31, 2022, respectively. These basis adjustments would be allocated to the amortized cost of specific securities within the pool if the hedge was dedesignated. Refer to Note 18 for additional information.

(b)Certain available-for-sale securities are included in fair value hedging relationships. Refer to Note 18 for additional information.

(c)Certain entities related to our Insurance operations are required to deposit securities with state regulatory authorities. These deposited securities totaled ~~$12~~$13 million and ~~$13~~$12 million at June 30, ~~2022,~~2023, and December 31, ~~2021,~~2022, respectively.

~~(b)Certain available-for-sale securities are included in fair value hedging relationships. Refer to Note 19 for additional information.~~

~~(c)~~(d)Available-for-sale securities with a fair value of ~~$3.7~~$5.0 billion and ~~$203 million~~$3.9 billion were pledged as collateral at June 30, ~~2022,~~2023, and December 31, ~~2021, respectively, were~~2022, respectively. This primarily included $3.3 billion and $3.0 billion pledged to secure advances from the FHLB ~~for short-term borrowings~~at June 30, 2023, and December 31, 2022, respectively. This also included securities pledged for other purposes as required by contractual ~~obligation~~obligations or ~~law. Under these~~law, under which agreements we granted the counterparty the right to sell or pledge ~~$304 million~~$1.7 billion and ~~$203~~$899 million of the underlying available-for-sale securities at June 30, ~~2022,~~2023, and December 31, ~~2021,~~2022, respectively.

~~(d)~~(e)Totals do not include accrued interest receivable, which was ~~$90~~$87 million and ~~$84~~$91 million at June 30, ~~2022,~~2023, and December 31, ~~2021,~~2022, respectively. Accrued interest receivable is included in other assets on our Condensed Consolidated Balance Sheet.

~~(e)~~(f)There was no allowance for credit losses recorded at both June 30, ~~2022,~~2023, or December 31, ~~2021,~~2022, as management determined that there were no expected credit losses in our portfolio of available-for-sale and held-to-maturity securities.

~~(f)~~(g)Totals do not include accrued interest receivable, which was $3$2 million at both June 30, ~~2022,~~2023, and December 31, ~~2021.~~2022. Accrued interest receivable is included in other assets on our Condensed Consolidated Balance Sheet.

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, 2022
Fair value of available-for-sale securities (a)
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		788		3.1		32		2.7		72		2.8		113		3.3		571		3.1
Foreign government		149		1.6		2		0.1		85		1.5		62		1.8		—		—
Agency mortgage-backed residential		17,859		2.5		—		—		—		—		21		2.0		17,838		2.5
Mortgage-backed residential		4,654		2.7		—		—		—		—		31		3.3		4,623		2.7
Agency mortgage-backed commercial(b)		3,730		2.1		—		—		24		3.1		1,031		2.3		2,675		2.0

Asset-backed		475		1.8		—		—		407		1.8		61		1.4		7		3.4
Corporate debt		1,714		2.3		67		2.4		878		2.2		760		2.3		9		3.1
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		$	35,521			$	377			$	2,183			$	3,961			$	29,000
Amortized cost of held-to-maturity securities
Agency mortgage-backed residential		$	1,112	2.8	%	$	—	—	%	$	—	—	%	$	—	—	%	$	1,112	2.8	%

Total held-to-maturity securities		$	1,112	2.8		$	—	—		$	—	—		$	—	—		$	1,112	2.8
December 31, 2021
June 30, 2023																						June 30, 2023
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	$	2,155	1.1	%	$	288	1.0	%	$	525	0.9	%	$	1,342	1.2	%	$	—	—	%	U.S. Treasury and federal agencies	$	2,029	1.6	%	$	14	2.3	%	$	920	1.3	%	$	1,095	1.8	%	$	—	—	%
U.S. States and political subdivisions	U.S. States and political subdivisions	864		3.0		26		1.6		77		2.8		128		3.3		633		3.0		U.S. States and political subdivisions	665		3.1		6		3.5		55		2.7		106		3.4		498		3.1
Foreign government	Foreign government	157		1.9		2		2.1		97		2.0		58		1.8		—		—		Foreign government	168		2.0		22		1.2		74		2.1		72		2.1		—		—
Agency mortgage-backed residential(b)	Agency mortgage-backed residential(b)	19,039		2.5		—		—		—		—		26		2.0		19,013		2.5		Agency mortgage-backed residential (b)	15,856		2.6		—		—		5		2.0		42		2.4		15,809		2.6
Mortgage-backed residential	Mortgage-backed residential	4,425		2.6		—		—		—		—		23		2.9		4,402		2.6		Mortgage-backed residential	4,143		2.8		—		—		—		—		12		2.9		4,131		2.8
Agency mortgage-backed commercial(b)	Agency mortgage-backed commercial(b)	4,526		1.9		—		—		26		2.4		1,578		2.4		2,922		1.7		Agency mortgage-backed commercial(b)	3,684		2.2		—		—		101		3.2		1,411		2.3		2,172		2.1

Asset-backed	Asset-backed	534		1.9		—		—		350		2.0		175		1.5		9		3.4		Asset-backed	383		1.8		—		—		371		1.7		11		5.1		1		2.7
Corporate debt	Corporate debt	1,887		2.3		54		2.9		830		2.3		994		2.3		9		2.5		Corporate debt	1,736		2.6		120		2.4		967		2.5		635		2.7		14		5.6
Total available-for-sale securities	Total available-for-sale securities	$	33,587	2.3		$	370	1.3		$	1,905	1.9		$	4,324	2.0		$	26,988	2.4		Total available-for-sale securities	$	28,664	2.5		$	162	2.3		$	2,493	1.9		$	3,384	2.3		$	22,625	2.6
Amortized cost of available-for-sale securities	Amortized cost of available-for-sale securities	$	33,650			$	368			$	1,893			$	4,291			$	27,098			Amortized cost of available-for-sale securities	$	33,809			$	166			$	2,695			$	3,916			$	27,032
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	$	1,170	2.8	%	$	—	—	%	$	—	—	%	$	—	—	%	$	1,170	2.8	%	Agency mortgage-backed residential	$	1,030	2.8	%	$	—	—	%	$	—	—	%	$	—	—	%	$	1,030	2.8	%

Total held-to-maturity securities	Total held-to-maturity securities	$	1,170	2.8		$	—	—		$	—	—		$	—	—		$	1,170	2.8		Total held-to-maturity securities	$	1,030	2.8		$	—	—		$	—	—		$	—	—		$	1,030	2.8
December 31, 2022																						December 31, 2022
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	$	2,016	1.6	%	$	—	—	%	$	716	1.3	%	$	1,300	1.7	%	$	—	—	%
U.S. States and political subdivisions																						U.S. States and political subdivisions	760		3.2		26		2.7		60		2.7		112		3.3		562		3.2
Foreign government																						Foreign government	146		1.8		13		0.8		74		1.8		59		1.9		—		—
Agency mortgage-backed residential(b)																						Agency mortgage-backed residential(b)	16,633		2.6		—		—		—		—		27		2.0		16,606		2.6
Mortgage-backed residential																						Mortgage-backed residential	4,299		2.8		—		—		—		—		14		2.9		4,285		2.8
Agency mortgage-backed commercial(b)																						Agency mortgage-backed commercial(b)	3,535		2.2		—		—		66		3.1		1,234		2.1		2,235		2.1

Asset-backed																						Asset-backed	433		1.7		—		—		401		1.7		25		1.8		7		3.5
Corporate debt																						Corporate debt	1,719		2.4		86		2.4		912		2.3		705		2.6		16		4.9
Total available-for-sale securities																						Total available-for-sale securities	$	29,541	2.5		$	125	2.3		$	2,229	1.9		$	3,476	2.1		$	23,711	2.6
Amortized cost of available-for-sale securities																						Amortized cost of available-for-sale securities	$	34,863			$	126			$	2,403			$	4,048			$	28,286
Amortized cost of held-to-maturity securities																						Amortized cost of held-to-maturity securities
Agency mortgage-backed residential																						Agency mortgage-backed residential	$	1,062	2.8	%	$	—	—	%	$	—	—	%	$	—	—	%	$	1,062	2.8	%

Total held-to-maturity securities																						Total held-to-maturity securities	$	1,062	2.8		$	—	—		$	—	—		$	—	—		$	1,062	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.

(b)Fair value includes a $75 million liability and a $12 million liability for agency mortgage-backed residential securities and an $11 million liability and $15 million asset for agency mortgage-backed commercial securities related to basis adjustments for securities in closed portfolios with active hedges under the portfolio layer method at June 30, 2023, and December 31, 2022, respectively. These basis adjustments would be allocated to the amortized cost of specific securities within the pool if the hedge was dedesignated. Refer to Note 18 for additional information.

The balances of cash equivalents were ~~$60~~$45 million and ~~$40~~$18 million at June 30, ~~2022,~~2023, and December 31, ~~2021,~~2022, respectively, and were composed primarily of money-market funds and short-term ~~securities, including U.S. Treasury bills.~~securities.

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)	2022		2021		2022		2021			($ in millions)	2023		2022		2023		2022
Taxable interest	Taxable interest	$	186	$	131	$	360	$	245		Taxable interest	$	229	$	186	$	446	$	360
Taxable dividends	Taxable dividends	4		7		8		12			Taxable dividends	4		4		7		8
Interest and dividends exempt from U.S. federal income tax	Interest and dividends exempt from U.S. federal income tax	5		5		10		10			Interest and dividends exempt from U.S. federal income tax	5		5		11		10
Interest and dividends on investment securities	Interest and dividends on investment securities	$	195	$	143	$	378	$	267		Interest and dividends on investment securities	$	238	$	195	$	464	$	378

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)		2022		2021		2022		2021
($ in millions)											($ in millions)	2023		2022		2023		2022
Available-for-sale securities	Available-for-sale securities										Available-for-sale securities
Gross realized gains	Gross realized gains	$	3	$	6	$	21	$	38		Gross realized gains	$	—	$	3	$	5	$	21

Net realized gain on available-for-sale securities	Net realized gain on available-for-sale securities	3		6		21		38			Net realized gain on available-for-sale securities	—		3		5		21
Net realized gain on equity securities	Net realized gain on equity securities	10		40		62		114			Net realized gain on equity securities	1		10		6		62
Net unrealized (loss) gain on equity securities		(137)		19		(202)		36
Other (loss) gain on investments, net		$	(124)	$	65	$	(119)	$	188
Net unrealized gain (loss) on equity securities											Net unrealized gain (loss) on equity securities	25		(137)		89		(202)
Other gain (loss) on investments, net											Other gain (loss) on investments, net	$	26	$	(124)	$	100	$	(119)

The following table presents the credit quality of our held-to-maturity securities, based on the latest available information as of June 30, ~~2022,~~2023, and December 31, ~~2021.~~2022. The credit ratings are sourced from nationally recognized statistical rating organizations, which include S&P, Moody’s, and Fitch. The ratings presented are a composite of the ratings sourced from the agencies or, if the ratings cannot be sourced from the agencies, are based on the asset type of the particular security. All of our held-to-maturity securities were current in their payment of principal and interest as of both June 30, ~~2022,~~2023, and December 31, ~~2021.~~2022. We have not recorded any interest income reversals on our held-to-maturity securities during the six months ended June 30, ~~2022,~~2023, or ~~2021.~~2022.


		June 30, 2022		December 31, 2021						June 30, 2023				December 31, 2022
($ 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	$	1,112	$	1,112	$	1,170	$	1,170		Agency mortgage-backed residential	$	1,030		$	1,030	$	1,062	$	1,062

Total held-to-maturity securities	Total held-to-maturity securities	$	1,112	$	1,112	$	1,170	$	1,170		Total held-to-maturity securities	$	1,030		$	1,030	$	1,062	$	1,062

(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.

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 ~~2021~~2022 Annual Report on Form 10-K. As of June 30, ~~2022,~~2023, and December 31, ~~2021,~~2022, 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. We have not recorded any interest income reversals on our available-for-sale securities during the six months ended June 30, ~~2022,~~2023, or ~~2021.~~2022.


		June 30, 2022								December 31, 2021									June 30, 2023								December 31, 2022

		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	$	1,965	$	(137)	$	409	$	(50)	$	1,682	$	(20)	$	—	$	—	U.S. Treasury and federal agencies	$	9	$	(1)	$	2,019	$	(247)	$	529	$	(68)	$	1,487	$	(188)
U.S. States and political subdivisions	U.S. States and political subdivisions	604		(68)		41		(4)		160		(3)		31		(1)		U.S. States and political subdivisions	193		(3)		439		(78)		547		(55)		135		(27)
Foreign government	Foreign government	121		(8)		25		(4)		76		(2)		7		—		Foreign government	23		(1)		143		(11)		75		(4)		71		(8)
Agency mortgage-backed residential(a)	Agency mortgage-backed residential(a)	13,719		(1,361)		4,044		(737)		12,244		(223)		38		(1)		Agency mortgage-backed residential(a)	1,219		(64)		14,621		(2,888)		7,472		(892)		8,978		(2,146)
Mortgage-backed residential	Mortgage-backed residential	4,319		(552)		267		(43)		3,243		(34)		22		—		Mortgage-backed residential	259		(12)		3,867		(806)		1,985		(289)		2,287		(566)
Agency mortgage-backed commercial(a)	Agency mortgage-backed commercial(a)	2,753		(419)		812		(197)		2,553		(70)		749		(43)		Agency mortgage-backed commercial(a)	366		(19)		3,233		(796)		996		(124)		2,535		(721)

Asset-backed	Asset-backed	425		(21)		14		—		360		(3)		—		—		Asset-backed	49		(1)		328		(20)		162		(4)		272		(22)
Corporate debt	Corporate debt	1,416		(134)		249		(48)		970		(18)		49		(3)		Corporate debt	149		(5)		1,536		(194)		782		(67)		895		(146)
Total available-for-sale securities	Total available-for-sale securities	$	25,322	$	(2,700)	$	5,861	$	(1,083)	$	21,288	$	(373)	$	896	$	(48)	Total available-for-sale securities	$	2,267	$	(106)	$	26,186	$	(5,040)	$	12,548	$	(1,503)	$	16,660	$	(3,824)

(a)Includes basis adjustments for certain securities that are included in closed portfolios with active hedges under the portfolio layer method at June 30, 2023, and December 31, 2022. The basis adjustments would be allocated to the amortized cost of specific securities within the pool if the hedge was dedesignated. Refer to Note 18 for additional information.

During the six months ended June 30, ~~2022,~~2023, and ~~2021,~~2022, 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,~~2023, or December 31, ~~2021.~~2022.

Table of Contents

Notes to Condensed Consolidated Financial Statements (unaudited)

Ally Financial Inc. • Form 10-Q

8.7. 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, 2022		December 31, 2021		($ in millions)	June 30, 2023		December 31, 2022

Consumer automotive (a)	Consumer automotive (a)	$	81,691	$	78,252	Consumer automotive (a)	$	84,294	$	83,286
Consumer mortgage	Consumer mortgage					Consumer mortgage
Mortgage Finance (b)	Mortgage Finance (b)	18,923		17,644		Mortgage Finance (b)	18,894		19,445
Mortgage — Legacy (c)	Mortgage — Legacy (c)	322		368		Mortgage — Legacy (c)	255		290
Total consumer mortgage	Total consumer mortgage	19,245		18,012		Total consumer mortgage	19,149		19,735
Consumer other	Consumer other					Consumer other
Personal Lending (d)	Personal Lending (d)	1,523		1,009		Personal Lending (d)	2,170		1,990
Credit Card ~~(e)~~	Credit Card ~~(e)~~	1,224		953		Credit Card ~~(e)~~	1,757		1,599
Total consumer other	Total consumer other	2,747		1,962		Total consumer other	3,927		3,589
Total consumer	Total consumer	103,683		98,226		Total consumer	107,370		106,610
Commercial	Commercial					Commercial
Commercial and industrial	Commercial and industrial					Commercial and industrial
Automotive	Automotive	12,174		12,229		Automotive	16,293		14,595
Other	Other	7,486		6,874		Other	9,124		9,154
Commercial real estate	Commercial real estate	5,114		4,939		Commercial real estate	5,662		5,389
Total commercial	Total commercial	24,774		24,042		Total commercial	31,079		29,138
Total finance receivables and loans (f) (g)		$	128,457	$	122,268
Total finance receivables and loans (e) (f)						Total finance receivables and loans (e) (f)	$	138,449	$	135,748

(a)Certain finance receivables and loans are included in fair value hedging relationships. Refer to Note 1918 for additional information.

(b)Includes loans originated as interest-only mortgage loans of $4$2 million and $5$3 million at June 30, ~~2022,~~2023, and December 31, ~~2021,~~2022, respectively, of which all have exited the interest-only period.

(c)Includes loans originated as interest-only mortgage loans of ~~$18~~$15 million and ~~$21~~$17 million at June 30, ~~2022,~~2023, and December 31, ~~2021,~~2022, respectively, of which all have exited the interest-only period.

(d)Includes $7$3 million of finance receivables at ~~both June 30, 2022, and~~ December 31, ~~2021,~~2022, 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 ~~$2.4 billion and~~ $2.3 billion at both June 30, ~~2022,~~2023, and December 31, ~~2021, respectively.~~2022.

~~(g)~~(f)Totals do not include accrued interest receivable, which was ~~$564~~$763 million and ~~$514~~$707 million at June 30, ~~2022,~~2023, and December 31, ~~2021,~~2022, 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, ~~2022,~~2023, and ~~2021,~~2022, respectively.


Three months ended June 30, 2022 ($ in millions)		Consumer automotive		Consumer mortgage		Consumer other (a)		Commercial		Total
Allowance at April 1, 2022		$	2,763	$	26	$	258	$	254	$	3,301
Three months ended June 30, 2023 ($ in millions)												Three months ended June 30, 2023 ($ in millions)	Consumer automotive		Consumer mortgage		Consumer other (a)		Commercial		Total
Allowance at April 1, 2023												Allowance at April 1, 2023	$	3,022	$	23	$	455	$	251	$	3,751
Charge-offs (b)	Charge-offs (b)	(277)		(1)		(27)		(26)		(331)		Charge-offs (b)	(496)		(2)		(70)		(61)		(629)
Recoveries	Recoveries	169		5		3		1		178		Recoveries	219		3		7		1		230
Net charge-offs	Net charge-offs	(108)		4		(24)		(25)		(153)		Net charge-offs	(277)		1		(63)		(60)		(399)
Provision for credit losses (c)	Provision for credit losses (c)	230		(3)		70		5		302		Provision for credit losses (c)	320		(2)		84		27		429
Other	Other	—		(1)		(1)		2		—		Other	(1)		1		—		—		—
Allowance at June 30, 2022		$	2,885	$	26	$	303	$	236	$	3,450
Allowance at June 30, 2023												Allowance at June 30, 2023	$	3,064	$	23	$	476	$	218	$	3,781

(a)Excludes $7$2 million of finance receivables and loans at ~~both~~ April 1, ~~2022, and June 30, 2022,~~2023, for which we have elected the fair value option and incorporate no allowance for loan losses.

(b)Refer to Note 1 to the Consolidated Financial Statements in our ~~2021~~2022 Annual Report on Form 10-K for information regarding our charge-off policies.

(c)Excludes $2 million of ~~provision~~benefit 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, 2022 ($ in millions)		Consumer automotive		Consumer mortgage		Consumer other (a)		Commercial		Total
Allowance at January 1, 2022		$	2,769	$	27	$	221	$	250	$	3,267
Six months ended June 30, 2023 ($ in millions)												Six months ended June 30, 2023 ($ in millions)	Consumer automotive		Consumer mortgage		Consumer other (a)		Commercial		Total
Allowance at January 1, 2023												Allowance at January 1, 2023	$	3,020	$	27	$	426	$	238	$	3,711
Charge-offs (b)	Charge-offs (b)	(553)		(2)		(51)		(26)		(632)		Charge-offs (b)	(1,032)		(3)		(134)		(61)		(1,230)
Recoveries	Recoveries	332		8		4		2		346		Recoveries	404		5		12		1		422
Net charge-offs	Net charge-offs	(221)		6		(47)		(24)		(286)		Net charge-offs	(628)		2		(122)		(60)		(808)
Provision for credit losses (c)	Provision for credit losses (c)	337		(6)		129		9		469		Provision for credit losses (c)	673		(6)		172		39		878
Other	Other	—		(1)		—		1		—		Other	(1)		—		—		1		—
Allowance at June 30, 2022		$	2,885	$	26	$	303	$	236	$	3,450
Allowance at June 30, 2023												Allowance at June 30, 2023	$	3,064	$	23	$	476	$	218	$	3,781

(a)Excludes$3 million of finance receivables and loans at January 1, 2023, for which we have elected the fair value option and incorporate no allowance for loan losses.

(b)Refer to Note 1 to the Consolidated Financial Statements in our 2022 Annual Report on Form 10-K for information regarding our charge-off policies.

(c)Excludes $5 million of benefit 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, 2022 ($ in millions)	Consumer automotive		Consumer mortgage		Consumer other (a)		Commercial		Total


Allowance at April 1, 2022	$	2,763	$	26	$	258	$	254	$	3,301
Charge-offs (b)	(277)		(1)		(27)		(26)		(331)
Recoveries	169		5		3		1		178
Net charge-offs	(108)		4		(24)		(25)		(153)
Provision for credit losses (c)	230		(3)		70		5		302
Other	—		(1)		(1)		2		—
Allowance at June 30, 2022	$	2,885	$	26	$	303	$	236	$	3,450

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

(b)Refer to Note 1 to the Consolidated Financial Statements in our ~~2021~~2022 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.


Three months ended June 30, 2021 ($ in millions)		Consumer automotive		Consumer mortgage		Consumer other (a)		Commercial		Total
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 April 1, 2021		$	2,809	$	26	$	69	$	248	$	3,152
Allowance at January 1, 2022												Allowance at January 1, 2022	$	2,769	$	27	$	221	$	250	$	3,267
Charge-offs (b)	Charge-offs (b)	(183)		(2)		(5)		(7)		(197)		Charge-offs (b)	(553)		(2)		(51)		(26)		(632)
Recoveries	Recoveries	188		3		1		11		203		Recoveries	332		8		4		2		346
Net charge-offs	Net charge-offs	5		1		(4)		4		6		Net charge-offs	(221)		6		(47)		(24)		(286)
Provision for credit losses(c)	Provision for credit losses(c)	(12)		(4)		8		(24)		(32)		Provision for credit losses(c)	337		(6)		129		9		469
Other	Other	—		1		(1)		—		—		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 ~~April~~January 1, ~~2021,~~2022, and June 30, ~~2021,~~2022, for which we have elected the fair value option and incorporate no allowance for loan losses.

(b)Refer to Note 1 to the Consolidated Financial Statements in our ~~2021~~2022 Annual Report on Form 10-K for information regarding our charge-off policies.

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)~~(c)Excludes $8$2 million of ~~finance receivables and loans at both January 1, 2021, and June 30, 2021,~~provision for ~~which we have elected the fair value option and incorporate no allowance~~credit losses related to our reserve for ~~loan losses.~~

~~(b)Refer to Note 1~~unfunded commitments. The liability related to the reserve for unfunded commitments is included in accrued expenses and other liabilities on our Condensed Consolidated ~~Financial Statements in our 2021 Annual Report on Form 10-K for information regarding our charge-off policies.~~Balance Sheet.

The following table presents ~~information about~~ sales of finance receivables and loans and transfers of finance receivables and loans from held-for-investment to 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)	2022		2021		2022		2021		($ in millions)	2023		2022		2023		2022

Consumer mortgage	Consumer mortgage	$	2	$	84	$	2	$	413	Consumer mortgage	$	—	$	2	$	1	$	2

Total sales and transfers	Total sales and transfers	$	2	$	84	$	2	$	413	Total sales and transfers	$	—	$	2	$	1	$	2

Table of Contents

Notes to Condensed Consolidated Financial Statements (unaudited)

Ally Financial Inc. • Form 10-Q

The following table presents ~~information about~~ 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)	2022		2021		2022		2021		($ in millions)	2023		2022		2023		2022
Consumer automotive	Consumer automotive	$	1,558	$	727	$	2,051	$	1,304	Consumer automotive	$	1,080	$	1,558	$	1,838	$	2,051
Consumer mortgage	Consumer mortgage	808		1,744		1,633		1,932		Consumer mortgage	5		808		7		1,633

Commercial	Commercial	1		—		1		—		Commercial	—		1		7		1
Total purchases of finance receivables and loans	Total purchases of finance receivables and loans	$	2,367	$	2,471	$	3,685	$	3,236	Total purchases of finance receivables and loans	$	1,085	$	2,367	$	1,852	$	3,685

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, ~~2022,~~2023, and December 31, ~~2021.~~2022. Refer to Note 1 for additional information on our accounting policy for finance receivables and loans on nonaccrual status.


						June 30, 2022									June 30, 2023
($ in millions)	($ in millions)	Nonaccrual status at Jan. 1, 2022		Nonaccrual status at Apr. 1, 2022		Nonaccrual status		Nonaccrual with no allowance (a)		($ in millions)	Nonaccrual status at Jan. 1, 2023		Nonaccrual status at Apr. 1, 2023		Nonaccrual status		Nonaccrual with no allowance (a)
Consumer automotive	Consumer automotive	$	1,078	$	1,072	$	1,073	$	421	Consumer automotive	$	1,187	$	1,110	$	1,098	$	501
Consumer mortgage	Consumer mortgage									Consumer mortgage
Mortgage Finance	Mortgage Finance	59		51		42		33		Mortgage Finance	34		34		38		20
Mortgage — Legacy	Mortgage — Legacy	26		24		22		21		Mortgage — Legacy	15		15		14		13
Total consumer mortgage	Total consumer mortgage	85		75		64		54		Total consumer mortgage	49		49		52		33
Consumer other	Consumer other									Consumer other
Personal Lending	Personal Lending	5		6		5		—		Personal Lending	13		12		11		—
Credit Card	Credit Card	11		14		18		—		Credit Card	43		54		55		—
Total consumer other	Total consumer other	16		20		23		—		Total consumer other	56		66		66		—
Total consumer	Total consumer	1,179		1,167		1,160		475		Total consumer	1,292		1,225		1,216		534
Commercial	Commercial									Commercial
Commercial and industrial	Commercial and industrial									Commercial and industrial
Automotive	Automotive	33		3		4		4		Automotive	5		—		24		7
Other	Other	221		217		214		79		Other	157		159		161		5
Commercial real estate	Commercial real estate	3		1		1		1		Commercial real estate	—		—		3		—
Total commercial	Total commercial	257		221		219		84		Total commercial	162		159		188		12
Total finance receivables and loans(b)	Total finance receivables and loans(b)	$	1,436	$	1,388	$	1,379	$	559	Total finance receivables and loans(b)	$	1,454	$	1,384	$	1,404	$	546

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

(b)We recorded interest income from cash payments associated with finance receivables and loans on nonaccrual status of $4 million and $7 million for the three months and six months ended June 30, 2023, respectively.

Table of Contents

Notes to Condensed Consolidated Financial Statements (unaudited)

Ally Financial Inc. • Form 10-Q


						December 31, 2021									December 31, 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	$	1,078	$	423	Consumer automotive	$	1,078	$	1,072	$	1,187	$	445
Consumer mortgage	Consumer mortgage									Consumer mortgage
Mortgage Finance	Mortgage Finance	67		63		59		39		Mortgage Finance	59		51		34		25
Mortgage — Legacy	Mortgage — Legacy	35		32		26		23		Mortgage — Legacy	26		24		15		14
Total consumer mortgage	Total consumer mortgage	102		95		85		62		Total consumer mortgage	85		75		49		39
Consumer other	Consumer other									Consumer other
Personal Lending	Personal Lending	3		2		5		—		Personal Lending	5		6		13		—
Credit Card	Credit Card	—		—		11		—		Credit Card	11		14		43		—
Total consumer other	Total consumer other	3		2		16		—		Total consumer other	16		20		56		—
Total consumer	Total consumer	1,361		1,270		1,179		485		Total consumer	1,179		1,167		1,292		484
Commercial	Commercial									Commercial
Commercial and industrial	Commercial and industrial									Commercial and industrial
Automotive	Automotive	40		17		33		32		Automotive	33		3		5		2
Other	Other	116		150		221		48		Other	221		217		157		33
Commercial real estate	Commercial real estate	5		2		3		3		Commercial real estate	3		1		—		—
Total commercial	Total commercial	161		169		257		83		Total commercial	257		221		162		35
Total finance receivables and loans(b)	Total finance receivables and loans(b)	$	1,522	$	1,439	$	1,436	$	568	Total finance receivables and loans(b)	$	1,436	$	1,388	$	1,454	$	519

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

(b)We recorded interest income from cash payments associated with finance receivables and loans inon 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.

Table of Contents

Notes to 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.

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, 2022 ($ in millions)		2022		2021		2020		2019		2018		2017 and prior		Revolving loans				Total
June 30, 2023 ($ in millions)																				June 30, 2023 ($ in millions)	2023		2022		2021		2020		2019		2018 and prior		Revolving loans				Revolving loans converted to term		Total
Consumer automotive	Consumer automotive																			Consumer automotive
Current	Current	$	21,265	$	27,856	$	13,276	$	8,651	$	4,735	$	3,225	$	—	$	—	$	79,008	Current	$	16,474	$	30,508	$	17,946	$	8,098	$	4,757	$	3,199	$	—	$	—	$	80,982
30–59 days past due	30–59 days past due	168		701		355		297		188		166		—		—		1,875		30–59 days past due	133		905		755		294		210		175		—		—		2,472
60–89 days past due	60–89 days past due	36		215		123		95		59		49		—		—		577		60–89 days past due	36		323		298		113		73		57		—		—		900
90 or more days past due	90 or more days past due	10		76		43		40		28		34		—		—		231		90 or more days past due	10		117		102		41		31		33		—		—		334
Total consumer automotive(a)	Total consumer automotive(a)	21,479		28,848		13,797		9,083		5,010		3,474		—		—		81,691		Total consumer automotive(a)	16,653		31,853		19,101		8,546		5,071		3,464		—		—		84,688
Consumer mortgage	Consumer mortgage																			Consumer mortgage
Mortgage Finance	Mortgage Finance																			Mortgage Finance
Current	Current	1,565		10,777		2,017		854		617		2,965		—		—		18,795		Current	62		2,233		10,641		1,885		769		3,223		—		—		18,813
30–59 days past due	30–59 days past due	10		49		4		5		3		20		—		—		91		30–59 days past due	—		7		8		5		5		18		—		—		43
60–89 days past due	60–89 days past due	—		1		—		—		2		3		—		—		6		60–89 days past due	—		1		4		—		—		8		—		—		13
90 or more days past due	90 or more days past due	1		2		—		5		8		15		—		—		31		90 or more days past due	—		1		4		—		3		17		—		—		25
Total Mortgage Finance	Total Mortgage Finance	1,576		10,829		2,021		864		630		3,003		—		—		18,923		Total Mortgage Finance	62		2,242		10,657		1,890		777		3,266		—		—		18,894
Mortgage — Legacy	Mortgage — Legacy																			Mortgage — Legacy
Current	Current	—		—		—		—		—		68		212		19		299		Current	—		—		—		—		—		58		164		17		239
30–59 days past due	30–59 days past due	—		—		—		—		—		3		1		—		4		30–59 days past due	—		—		—		—		—		2		2		1		5
60–89 days past due	60–89 days past due	—		—		—		—		—		1		—		—		1		60–89 days past due	—		—		—		—		—		1		—		—		1
90 or more days past due	90 or more days past due	—		—		—		—		—		12		4		2		18		90 or more days past due	—		—		—		—		—		7		1		2		10
Total Mortgage — Legacy	Total Mortgage — Legacy	—		—		—		—		—		84		217		21		322		Total Mortgage — Legacy	—		—		—		—		—		68		167		20		255
Total consumer mortgage	Total consumer mortgage	1,576		10,829		2,021		864		630		3,087		217		21		19,245		Total consumer mortgage	62		2,242		10,657		1,890		777		3,334		167		20		19,149
Consumer other	Consumer other																			Consumer other
Personal Lending	Personal Lending																			Personal Lending
Current	Current	830		568		79		9		2		1		—		—		1,489		Current	716		1,093		277		32		3		—		—		—		2,121
30–59 days past due	30–59 days past due	5		7		1		—		—		—		—		—		13		30–59 days past due	4		13		4		1		—		—		—		—		22
60–89 days past due	60–89 days past due	3		5		1		—		—		—		—		—		9		60–89 days past due	2		10		4		—		—		—		—		—		16
90 or more days past due	90 or more days past due	2		3		—		—		—		—		—		—		5		90 or more days past due	1		7		3		—		—		—		—		—		11
Total Personal Lending ~~(a)~~	Total Personal Lending ~~(a)~~	840		583		81		9		2		1		—		—		1,516		Total Personal Lending ~~(a)~~	723		1,123		288		33		3		—		—		—		2,170
Credit Card	Credit Card																			Credit Card
Current	Current	—		—		—		—		—		—		1,189		—		1,189		Current	—		—		—		—		—		—		1,654		—		1,654
30–59 days past due	30–59 days past due	—		—		—		—		—		—		11		—		11		30–59 days past due	—		—		—		—		—		—		27		—		27
60–89 days past due	60–89 days past due	—		—		—		—		—		—		8		—		8		60–89 days past due	—		—		—		—		—		—		24		—		24
90 or more days past due	90 or more days past due	—		—		—		—		—		—		16		—		16		90 or more days past due	—		—		—		—		—		—		52		—		52
Total Credit Card	Total Credit Card	—		—		—		—		—		—		1,224		—		1,224		Total Credit Card	—		—		—		—		—		—		1,757		—		1,757
Total consumer other	Total consumer other	840		583		81		9		2		1		1,224		—		2,740		Total consumer other	723		1,123		288		33		3		—		1,757		—		3,927
Total consumer	Total consumer	$	23,895	$	40,260	$	15,899	$	9,956	$	5,642	$	6,562	$	1,441	$	21	$	103,676	Total consumer	$	17,438	$	35,218	$	30,046	$	10,469	$	5,851	$	6,798	$	1,924	$	20	$	107,764

(a)~~Excludes $7~~Certain consumer automotive loans are included in fair value hedging relationships. The amortized cost excludes a liability of $394 million ~~of finance receivables~~related to basis adjustments for loans in closed portfolios with active hedges under the portfolio layer method at June 30, ~~2022,~~2023. These basis adjustments would be allocated to the amortized cost of specific loans within the pool if the hedge was dedesignated. Refer to Note 18 for ~~which we have elected the fair value option.~~additional information.

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, 2021 ($ in millions)		2021		2020		2019		2018		2017		2016 and prior		Revolving loans				Total
December 31, 2022 ($ in millions)																				December 31, 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	$	35,222	$	17,218	$	11,512	$	6,692	$	3,403	$	1,911	$	—	$	—	$	75,958	Current	$	36,127	$	22,102	$	10,341	$	6,451	$	3,237	$	1,890	$	—	$	—	$	80,148
30–59 days past due	30–59 days past due	424		353		334		226		139		101		—		—		1,577		30–59 days past due	707		878		370		284		165		120		—		—		2,524
60–89 days past due	60–89 days past due	115		114		108		70		41		28		—		—		476		60–89 days past due	207		324		135		99		55		38		—		—		858
90 or more days past due	90 or more days past due	41		51		56		40		27		26		—		—		241		90 or more days past due	73		111		47		38		23		24		—		—		316
Total consumer automotive(a)	Total consumer automotive(a)	35,802		17,736		12,010		7,028		3,610		2,066		—		—		78,252		Total consumer automotive(a)	37,114		23,415		10,893		6,872		3,480		2,072		—		—		83,846
Consumer mortgage	Consumer mortgage																			Consumer mortgage
Mortgage Finance	Mortgage Finance																			Mortgage Finance
Current	Current	10,169		2,212		977		744		1,041		2,363		—		—		17,506		Current	2,292		10,893		1,946		815		577		2,805		—		—		19,328
30–59 days past due	30–59 days past due	50		3		3		7		2		12		—		—		77		30–59 days past due	15		29		4		3		4		26		—		—		81
60–89 days past due	60–89 days past due	8		—		1		—		—		5		—		—		14		60–89 days past due	2		4		—		1		1		3		—		—		11
90 or more days past due	90 or more days past due	—		—		5		16		7		19		—		—		47		90 or more days past due	—		1		—		2		8		14		—		—		25
Total Mortgage Finance	Total Mortgage Finance	10,227		2,215		986		767		1,050		2,399		—		—		17,644		Total Mortgage Finance	2,309		10,927		1,950		821		590		2,848		—		—		19,445
Mortgage — Legacy	Mortgage — Legacy																			Mortgage — Legacy
Current	Current	—		—		—		—		—		79		238		23		340		Current	—		—		—		—		—		62		191		18		271
30–59 days past due	30–59 days past due	—		—		—		—		—		2		1		—		3		30–59 days past due	—		—		—		—		—		4		1		—		5
60–89 days past due	60–89 days past due	—		—		—		—		—		1		—		1		2		60–89 days past due	—		—		—		—		—		—		—		1		1
90 or more days past due	90 or more days past due	—		—		—		—		—		15		5		3		23		90 or more days past due	—		—		—		—		—		8		3		2		13
Total Mortgage — Legacy	Total Mortgage — Legacy	—		—		—		—		—		97		244		27		368		Total Mortgage — Legacy	—		—		—		—		—		74		195		21		290
Total consumer mortgage	Total consumer mortgage	10,227		2,215		986		767		1,050		2,496		244		27		18,012		Total consumer mortgage	2,309		10,927		1,950		821		590		2,922		195		21		19,735
Consumer other	Consumer other																			Consumer other
Personal Lending	Personal Lending																			Personal Lending
Current	Current	821		133		18		5		1		—		—		—		978		Current	1,492		392		48		5		1		—		—		—		1,938
30–59 days past due	30–59 days past due	9		2		—		—		—		—		—		—		11		30–59 days past due	14		6		1		—		—		—		—		—		21
60–89 days past due	60–89 days past due	6		1		1		—		—		—		—		—		8		60–89 days past due	9		5		1		—		—		—		—		—		15
90 or more days past due	90 or more days past due	4		1		—		—		—		—		—		—		5		90 or more days past due	8		5		—		—		—		—		—		—		13
Total Personal Lending ~~(a)~~(b)	Total Personal Lending ~~(a)~~(b)	840		137		19		5		1		—		—		—		1,002		Total Personal Lending ~~(a)~~(b)	1,523		408		50		5		1		—		—		—		1,987
Credit Card	Credit Card																			Credit Card
Current	Current	—		—		—		—		—		—		932		—		932		Current	—		—		—		—		—		—		1,518		—		1,518
30–59 days past due	30–59 days past due	—		—		—		—		—		—		6		—		6		30–59 days past due	—		—		—		—		—		—		22		—		22
60–89 days past due	60–89 days past due	—		—		—		—		—		—		5		—		5		60–89 days past due	—		—		—		—		—		—		18		—		18
90 or more days past due	90 or more days past due	—		—		—		—		—		—		10		—		10		90 or more days past due	—		—		—		—		—		—		41		—		41
Total Credit Card	Total Credit Card	—		—		—		—		—		—		953		—		953		Total Credit Card	—		—		—		—		—		—		1,599		—		1,599
Total consumer other	Total consumer other	840		137		19		5		1		—		953		—		1,955		Total consumer other	1,523		408		50		5		1		—		1,599		—		3,586
Total consumer	Total consumer	$	46,869	$	20,088	$	13,015	$	7,800	$	4,661	$	4,562	$	1,197	$	27	$	98,219	Total consumer	$	40,946	$	34,750	$	12,893	$	7,698	$	4,071	$	4,994	$	1,794	$	21	$	107,167

(a)Certain consumer automotive loans are included in fair value hedging relationships. The amortized cost excludes a liability of $560 million related to basis adjustments for loans in closed portfolios with active hedges under the portfolio layer method at December 31, 2022. These basis adjustments would be allocated to the amortized cost of specific loans within the pool if the hedge was dedesignated. Refer to Note 18 for additional information.

(b)Excludes $7$3 million of finance receivables at December 31, ~~2021,~~2022, 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 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.

•Loss — Loans that are considered uncollectible and of such little value that their continuance as bankable assets is not warranted. This classification does not mean that the asset has absolutely no recovery or salvage value, but rather that it is not practical or desirable to defer writing off this basically worthless asset even though partial recovery may be effected in the future.

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, 2022 ($ in millions)		2022		2021		2020		2019		2018		2017 and prior		Revolving loans				Total
June 30, 2023 ($ in millions)																				June 30, 2023 ($ in millions)	2023		2022		2021		2020		2019		2018 and prior		Revolving loans				Revolving loans converted to term		Total
Commercial	Commercial																			Commercial
Commercial and industrial	Commercial and industrial																			Commercial and industrial
Automotive	Automotive																			Automotive
Pass	Pass	$	191	$	291	$	151	$	88	$	42	$	60	$	10,771	$	—	$	11,594	Pass	$	271	$	560	$	189	$	112	$	68	$	44	$	13,877	$	—	$	15,121
Special mention	Special mention	—		—		—		4		12		25		464		—		505		Special mention	2		19		45		—		—		24		1,016		—		1,106
Substandard	Substandard	—		—		1		1		—		—		73		—		75		Substandard	—		1		—		—		—		—		49		—		50
Doubtful																				Doubtful	—		—		—		—		—		—		16		—		16

Total automotive	Total automotive	191		291		152		93		54		85		11,308		—		12,174		Total automotive	273		580		234		112		68		68		14,958		—		16,293
Other	Other																			Other
Pass	Pass	410		603		430		268		65		185		4,338		85		6,384		Pass	185		553		377		306		360		206		5,611		147		7,745
Special mention	Special mention	—		37		178		66		44		80		243		28		676		Special mention	—		233		175		195		51		154		281		24		1,113
Substandard	Substandard	—		—		18		116		—		156		55		15		360		Substandard	—		—		23		3		27		120		42		15		230
Doubtful	Doubtful	—		—		—		—		—		56		8		2		66		Doubtful	—		—		—		—		—		26		3		—		29

Loss (a)																				Loss (a)	—		—		—		—		7		—		—		—		7
Total other	Total other	410		640		626		450		109		477		4,644		130		7,486		Total other	185		786		575		504		445		506		5,937		186		9,124
Commercial real estate	Commercial real estate																			Commercial real estate
Pass	Pass	606		1,299		1,005		720		510		826		9		9		4,984		Pass	385		1,529		1,161		929		662		895		9		31		5,601
Special mention	Special mention	—		76		2		26		—		23		—		—		127		Special mention	—		7		31		2		18		—		—		—		58
Substandard	Substandard	—		—		—		—		—		3		—		—		3		Substandard	—		2		—		—		—		1		—		—		3

Total commercial real estate	Total commercial real estate	606		1,375		1,007		746		510		852		9		9		5,114		Total commercial real estate	385		1,538		1,192		931		680		896		9		31		5,662
Total commercial	Total commercial	$	1,207	$	2,306	$	1,785	$	1,289	$	673	$	1,414	$	15,961	$	139	$	24,774	Total commercial	$	843	$	2,904	$	2,001	$	1,547	$	1,193	$	1,470	$	20,904	$	217	$	31,079

(a)During the three months ended June 30, 2023, we incurred a $56 million charge-off of one exposure within our commercial and industrial loan portfolio class. The $7 million risk-rated as a loss relates to the remaining amortized cost of this exposure which we expect to collect in full.

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, 2021 ($ in millions)		2021		2020		2019		2018		2017		2016 and prior		Revolving loans				Total
December 31, 2022 ($ in millions)																				December 31, 2022 ($ in millions)	2022		2021		2020		2019		2018		2017 and prior		Revolving loans				Revolving loans converted to term		Total
Commercial	Commercial																			Commercial
Commercial and industrial	Commercial and industrial																			Commercial and industrial
Automotive	Automotive																			Automotive
Pass	Pass	$	347	$	190	$	112	$	49	$	23	$	56	$	10,741	$	—	$	11,518	Pass	$	640	$	211	$	132	$	78	$	28	$	34	$	12,327	$	—	$	13,450
Special mention	Special mention	7		1		7		15		31		18		589		—		668		Special mention	23		47		—		—		10		21		1,016		—		1,117
Substandard	Substandard	—		1		—		1		—		—		41		—		43		Substandard	—		—		—		1		—		—		27		—		28

Total automotive	Total automotive	354		192		119		65		54		74		11,371		—		12,229		Total automotive	663		258		132		79		38		55		13,370		—		14,595
Other	Other																			Other
Pass	Pass	739		448		374		86		99		68		4,032		83		5,929		Pass	594		469		607		419		54		133		5,344		89		7,709
Special mention	Special mention	15		169		96		21		10		122		93		17		543		Special mention	177		158		175		95		47		128		278		35		1,093
Substandard	Substandard	—		22		95		—		140		83		13		23		376		Substandard	—		—		4		51		—		139		55		13		262
Doubtful	Doubtful	—		—		—		—		—		26		—		—		26		Doubtful	—		—		—		64		—		25		—		—		89
Loss																				Loss	—		—		—		—		—		—		1		—		1
Total other	Total other	754		639		565		107		249		299		4,138		123		6,874		Total other	771		627		786		629		101		425		5,678		137		9,154
Commercial real estate	Commercial real estate																			Commercial real estate
Pass	Pass	1,298		1,060		873		604		342		653		3		8		4,841		Pass	1,481		1,118		951		679		369		716		9		13		5,336
Special mention	Special mention	13		5		29		7		18		19		—		—		91		Special mention	—		32		2		19		—		—		—		—		53
Substandard		—		—		—		—		—		7		—		—		7

Total commercial real estate	Total commercial real estate	1,311		1,065		902		611		360		679		3		8		4,939		Total commercial real estate	1,481		1,150		953		698		369		716		9		13		5,389
Total commercial	Total commercial	$	2,419	$	1,896	$	1,586	$	783	$	663	$	1,052	$	15,512	$	131	$	24,042	Total commercial	$	2,915	$	2,035	$	1,871	$	1,406	$	508	$	1,196	$	19,057	$	150	$	29,138

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

($ 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, 2022
Commercial
Commercial and industrial
Automotive $ — $ — $ — $ — $ 12,174 $ 12,174
Other — — 2 2 7,484 7,486
Commercial real estate — — — — 5,114 5,114
Total commercial $ — $ — $ 2 $ 2 $ 24,772 $ 24,774
December 31, 2021
Commercial
Commercial and industrial
Automotive $ — $ — $ — $ — $ 12,229 $ 12,229
Other — — 1 1 6,873 6,874
Commercial real estate — — — — 4,939 4,939
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 $2.6 billion and $2.4 billion at June 30, 2022, and December 31, 2021, respectively.



($ 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, 2023
Commercial
Commercial and industrial
Automotive	$	12	$	—	$	—	$	12	$	16,281	$	16,293
Other	1		—		7		8		9,116		9,124
Commercial real estate	—		—		—		—		5,662		5,662
Total commercial	$	13	$	—	$	7	$	20	$	31,059	$	31,079
December 31, 2022
Commercial
Commercial and industrial
Automotive	$	—	$	—	$	—	$	—	$	14,595	$	14,595
Other	—		1		2		3		9,151		9,154
Commercial real estate	—		—		—		—		5,389		5,389
Total commercial	$	—	$	1	$	2	$	3	$	29,135	$	29,138

~~Table of Contents~~

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

~~Ally Financial Inc. • Form 10-Q~~

Total commitments to lend additional funds to borrowers whose terms had been modified in a TDR were $43 million and $18 million at June 30, 2022, and December 31, 2021, respectively. Refer to Note 1 to the Consolidated Financial Statements in our 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

2022 2021
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 26,379 $ 444 $ 433 40,260 $ 743 $ 733
Consumer mortgage
Mortgage Finance 9 7 7 15 8 9
Mortgage — Legacy 7 1 1 4 1 1
Total consumer mortgage 16 8 8 19 9 10
Consumer other
Credit Card 1,094 2 2 — — —
Total consumer other 1,094 2 2 — — —
Total consumer 27,489 454 443 40,279 752 743
Commercial
Commercial and industrial
Automotive — — — 1 1 1
Other 4 411 411 1 33 33
Commercial real estate — — — 1 3 3
Total commercial 4 411 411 3 37 37
Total finance receivables and loans 27,493 $ 865 $ 854 40,282 $ 789 $ 780

Table of Contents

Notes to Condensed Consolidated Financial Statements (unaudited)

Ally Financial Inc. • Form 10-Q

The following table presents gross charge-offs of our finance receivables and loans for each portfolio class by origination year that occurred during the six months ended June 30, 2023. Refer to Note 1 to the Consolidated Financial Statements in our 2022 Annual Report on Form 10-K for additional information on our charge-off policy.


	Origination year														Revolving loans converted to term
Six months ended June 30, 2023 ($ in millions)	2023		2022		2021		2020		2019		2018 and prior		Revolving loans				Total
Consumer automotive	$	21	$	437	$	329	$	102	$	76	$	67	$	—	$	—	$	1,032
Consumer mortgage
Mortgage Finance	—		—		—		—		—		1		—		—		1
Mortgage — Legacy	—		—		—		—		—		2		—		—		2
Total consumer mortgage	—		—		—		—		—		3		—		—		3
Consumer other
Personal Lending	1		40		17		2		—		—		—		—		60
Credit Card	—		—		—		—		—		—		70		4		74
Total consumer other	1		40		17		2		—		—		70		4		134
Total consumer	22		477		346		104		76		70		70		4		1,169
Commercial
Commercial and industrial
Automotive	—		—		—		—		—		—		4		—		4
Other	—		—		—		—		57		—		—		—		57

Total commercial	—		—		—		—		57		—		4		—		61
Total finance receivables and loans	$	22	$	477	$	346	$	104	$	133	$	70	$	74	$	4	$	1,230

Table of Contents

Notes to Condensed Consolidated Financial Statements (unaudited)

Ally Financial Inc. • Form 10-Q

Loan Modifications

The following tables present the amortized cost basis of loans that were modified subsequent to origination during the three months and six months ended June 30, 2023, for each portfolio segment, by modification type. For additional information on loan modification types in scope of this disclosure, refer to Note 1. The below tables exclude consumer mortgage finance receivables and loans currently enrolled in a trial modification program. Trial modifications generally represent a three-month period during which the borrower makes monthly payments under the anticipated modified payment terms. If the borrower successfully completes the trial loan modification program, the contractual terms of the loan are updated and the modification is considered permanent. As of June 30, 2023, there were $4 million of consumer mortgage finance receivables and loans in a trial modification program.


	Payment extensions
Three months ended June 30, 2023 ($ in millions)	Payment deferrals		Contractual maturity extensions		Principal forgiveness		Interest rate concessions		Combination		Total
Consumer automotive	$	—	$	25	$	12	$	—	$	—	$	37
Consumer mortgage
Mortgage Finance	—		—		—		—		1		1

Total consumer mortgage	—		—		—		—		1		1
Consumer other

Credit Card	—		—		—		3		—		3
Total consumer other	—		—		—		3		—		3
Total consumer	—		25		12		3		1		41
Commercial
Commercial and industrial

Other	36		36		—		—		—		72

Total commercial	36		36		—		—		—		72
Total finance receivables and loans	$	36	$	61	$	12	$	3	$	1	$	113


	Payment extensions
Six months ended June 30, 2023 ($ in millions)	Payment deferrals		Contractual maturity extensions		Principal forgiveness		Interest rate concessions		Combination		Total (a)
Consumer automotive	$	—	$	40	$	14	$	—	$	33	$	87
Consumer mortgage
Mortgage Finance	—		2		—		—		2		4
Mortgage — Legacy	—		1		—		—		—		1
Total consumer mortgage	—		3		—		—		2		5
Consumer other

Credit Card	—		—		—		6		—		6
Total consumer other	—		—		—		6		—		6
Total consumer	—		43		14		6		35		98
Commercial
Commercial and industrial

Other	64		43		—		—		—		107

Total commercial	64		43		—		—		—		107
Total finance receivables and loans	$	64	$	86	$	14	$	6	$	35	$	205

(a)Represents 0.1% of total finance receivables and loans outstanding as of June 30, 2023.

Table of Contents

Notes to Condensed Consolidated Financial Statements (unaudited)

Ally Financial Inc. • Form 10-Q

The following tables present the financial effect of loan modifications that occurred during the three months and six months ended June 30, 2023.


	Payment extensions (a)	Principal forgiveness		Interest rate concessions (a)				Combination (a) (b) (c)
Three months ended June 30, 2023 ($ in millions)	Number of months extended/deferred	Amount forgiven		Initial rate		Revised rate		Remaining term	Revised remaining term	Initial rate		Revised rate
Consumer automotive	26	$	2	—	%	—	%	—	—	—	%	—	%
Consumer mortgage
Mortgage Finance	—	—		—		—		294	480	4.0		2.0

Total consumer mortgage	—	—		—		—		294	480	4.0		2.0
Consumer other

Credit Card	—	—		30.3		10.9		—	—	—		—
Total consumer other	—	—		30.3		10.9		—	—	—		—
Commercial
Commercial and industrial

Other	6	—		—		—		—	—	—		—

Total commercial	6	$	—	—		—		—	—	—		—

(a)Calculated using a weighted-average balance for each portfolio class.

(b)Term is presented in number of months.

(c)Some Mortgage Finance combination loan modifications include deferrals of principal. The weighted average number of months deferred for these loans was 186 months.


	Payment extensions (a)	Principal forgiveness		Interest rate concessions (a)				Combination (a) (b) (c)
Six months ended June 30, 2023 ($ in millions)	Number of months extended/deferred	Amount forgiven		Initial rate		Revised rate		Remaining term	Revised remaining term	Initial rate		Revised rate
Consumer automotive	25	$	2	—	%	—	%	75	85	10.4	%	9.8	%
Consumer mortgage
Mortgage Finance	174	—		—		—		309	470	4.6		3.4
Mortgage — Legacy	96	—		—		—		—	—	—		—
Total consumer mortgage	146	—		—		—		309	470	4.6		3.4
Consumer other

Credit Card	—	—		30.0		9.0		—	—	—		—
Total consumer other	—	—		30.0		9.0		—	—	—		—
Commercial
Commercial and industrial

Other	12	—		—		—		—	—	—		—

Total commercial	12	$	—	—		—		—	—	—		—

(a)Calculated using a weighted-average balance for each portfolio class.

(b)Term is presented in number of months.

(c)Some Mortgage Finance combination loan modifications include deferrals of principal. The weighted average number of months deferred for these loans was 186 months.

Table of Contents

Notes to Condensed Consolidated Financial Statements (unaudited)

Ally Financial Inc. • Form 10-Q

The following tables present the subsequent performance of loans recorded at amortized cost, by portfolio segment and credit quality indicator, that have been modified during the three months and six months ended June 30, 2023.


Three months ended June 30, 2023 ($ in millions)	Current		30–59 days past due		60–89 days past due		90 or more days past due		Total
Consumer automotive

Contractual maturity extensions	$	24	$	1	$	—	$	—	$	25
Principal forgiveness	10		1		—		1		12


Total consumer automotive (a)	34		2		—		1		37
Consumer mortgage
Mortgage Finance




Combination	1		—		—		—		1
Total Mortgage Finance	1		—		—		—		1







Total consumer mortgage	1		—		—		—		1
Consumer other






Credit Card



Interest rate concessions	1		1		—		1		3


Total consumer other	1		1		—		1		3
Total consumer	$	36	$	3	$	—	$	2	$	41

(a)During the three months ended June 30, 2023, 29 consumer automotive loans with a total amortized cost of $1 million have redefaulted.


Three months ended June 30, 2023 ($ in millions)	Pass		Special mention		Substandard		Doubtful		Total
Commercial and industrial



Other
Payment deferrals	$	—	$	—	$	36	$	—	$	36
Contractual maturity extensions	31		—		5		—		36



Total commercial	$	31	$	—	$	41	$	—	$	72

Table of Contents

Notes to Condensed Consolidated Financial Statements (unaudited)

Ally Financial Inc. • Form 10-Q


Six months ended June 30, 2023 ($ in millions)	Current		30–59 days past due		60–89 days past due		90 or more days past due		Total
Consumer automotive

Contractual maturity extensions	$	38	$	2	$	—	$	—	$	40
Principal forgiveness	10		1		—		3		14

Combination	31		2		—		—		33
Total consumer automotive (a)	79		5		—		3		87
Consumer mortgage
Mortgage Finance

Contractual maturity extensions	2		—		—		—		2


Combination	—		—		2		—		2
Total Mortgage Finance	2		—		2		—		4
Mortgage — Legacy

Contractual maturity extensions	1		—		—		—		1



Total Mortgage — Legacy	1		—		—		—		1
Total consumer mortgage	3		—		2		—		5
Consumer other






Credit Card



Interest rate concessions	3		1		1		1		6


Total consumer other	3		1		1		1		6
Total consumer	$	85	$	6	$	3	$	4	$	98

(a)During the six months ended June 30, 2023, 41 consumer automotive loans with a total amortized cost of $1 million have redefaulted.


Six months ended June 30, 2023 ($ in millions)	Pass		Special mention		Substandard		Doubtful		Total
Commercial and industrial



Other
Payment deferrals	$	—	$	—	$	36	$	28	$	64
Contractual maturity extensions	31		7		5		—		43



Total commercial	$	31	$	7	$	41	$	28	$	107

Troubled Debt Restructuring Disclosures Prior to the Adoption of ASU 2022-02

The adoption of ASU 2022-02 eliminated TDR recognition and measurement guidance, as well as all TDR-related disclosures. Refer to Note 1 for additional information. TDRs were loan modifications where concessions were granted to borrowers experiencing financial difficulties. Total TDRs recorded at amortized cost were $2.4 billion at December 31, 2022.

Table of Contents

Notes to Condensed Consolidated Financial Statements (unaudited)

Ally Financial Inc. • Form 10-Q

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



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

Consumer automotive	12,928	$	213	$	206
Consumer mortgage
Mortgage Finance	3	2		2
Mortgage — Legacy	3	—		—
Total consumer mortgage	6	2		2
Consumer other

Credit Card	743	1		1
Total consumer other	743	1		1
Total consumer	13,677	216		209
Commercial
Commercial and industrial

Other	3	377		377

Total commercial	3	377		377
Total finance receivables and loans	13,680	$	593	$	586



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

Consumer automotive	26,379	$	444	$	433
Consumer mortgage
Mortgage Finance	9	7		7
Mortgage — Legacy	7	1		1
Total consumer mortgage	16	8		8
Consumer other

Credit Card	1,094	2		2
Total consumer other	1,094	2		2
Total consumer	27,489	454		443
Commercial
Commercial and industrial

Other	4	411		411

Total commercial	4	411		411
Total finance receivables and loans	27,493	$	865	$	854

Table of Contents

Notes to Condensed Consolidated Financial Statements (unaudited)

Ally Financial Inc. • Form 10-Q

The following tables present 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 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.


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

Consumer automotive	Consumer automotive	2,138	$	35	$	14	1,751	$	22	$	11	Consumer automotive	2,138	$	35	$	14
Consumer mortgage	Consumer mortgage											Consumer mortgage
Mortgage Finance	Mortgage Finance	1	—		—		1	—		—		Mortgage Finance	1	—		—
Mortgage — Legacy		—	—		—		2	—		—

Total consumer mortgage	Total consumer mortgage	1	—		—		3	—		—		Total consumer mortgage	1	—		—
Consumer other	Consumer other											Consumer other

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

Total finance receivables and loans												Total finance receivables and loans	2,218	$	35	$	14


	2022					2021
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	4,249	$	66	$	27	4,565	$	55	$	31
Consumer mortgage
Mortgage Finance	3	2		—		1	—		—
Mortgage — Legacy	—	—		—		4	—		—
Total consumer mortgage	3	2		—		5	—		—
Consumer other

Credit Card	79	—		—		—	—		—
Total consumer other	79	—		—		—	—		—
Total consumer finance receivables and loans	4,331	$	68	$	27	4,570	$	55	$	31
Six months ended June 30, 2022 ($ in millions)											Six months ended June 30, 2022 ($ in millions)	Number of loans	Amortized cost		Charge-off amount

Consumer automotive											Consumer automotive	4,249	$	66	$	27
Consumer mortgage											Consumer mortgage
Mortgage Finance											Mortgage Finance	3	2		—

Total consumer mortgage											Total consumer mortgage	3	2		—
Consumer Other											Consumer Other
Credit Card											Credit Card	79	—		—
Total consumer other											Total consumer other	79	—		—

Total finance receivables and loans											Total finance receivables and loans	4,331	$	68	$	27

9.8. Leasing

Ally as the Lessee

We have operating leases for certain of our corporate facilities, which have remaining lease terms of ~~1 month~~2 months to 78 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 to 15 years. Some of those lease agreements also include options to~~or terminate the ~~leases in periods that range from approximately 5 to 6 years after the commencement of the leases.~~lease. We ~~have~~do not ~~included any of~~include these term extensions or termination provisions in our estimates of the lease term asif 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.

During the three months and six months ended June 30, ~~2022,~~2023, we paid $9$8 million and ~~$19~~$16 million, respectively, in cash for amounts included in the measurement of lease liabilities at June 30, ~~2022,~~2023, compared to ~~$16~~$9 million and ~~$29~~$19 million for the three months and six months ended June 30, ~~2021,~~2022, in cash for amounts included in the measurement of lease liabilities at June 30, ~~2021.~~2022. 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, ~~2022,~~2023, and June 30, ~~2021,~~2022, we obtained ~~$21~~$1 million and ~~$333~~$21 million, respectively, of ROU assets in exchange for new lease liabilities. As of June 30, ~~2022,~~2023, the weighted-average remaining lease term of our operating lease portfolio was 5 years, and the weighted-average discount rate was ~~2.24%~~2.61%, compared to 65 years and ~~1.96%~~2.57% as of December 31, ~~2021.~~2022.

3136

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, ~~2022,~~2023, and that have noncancelable lease terms expiring after June 30, ~~2022.~~2023.

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

In March 2021, we commenced the lease for a new corporate facility in Charlotte, North Carolina, which included an underlying purchase 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 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.


($ in millions)
2023	$	17
2024	32
2025	26
2026	21
2027	16
2028 and thereafter	18
Total undiscounted cash flows	130
Difference between undiscounted cash flows and discounted cash flows	(8)
Total lease liability	$	122

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)	2022		2021		2022		2021		($ in millions)	2023		2022		2023		2022
Operating lease expense	Operating lease expense	$	9	$	14	$	17	$	26	Operating lease expense	$	7	$	9	$	14	$	17

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

Total lease expense, net (a)	Total lease expense, net (a)	$	10	$	16	$	19	$	30	Total lease expense, net (a)	$	8	$	10	$	16	$	19

(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~~generally 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 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, ~~2022,~~2023, and December 31, ~~2021,~~2022, consumer operating leases with a carrying value, net of accumulated depreciation, of ~~$88~~$30 million and ~~$165~~$56 million, respectively, were covered by a residual value guarantee of 15% of the manufacturer’s suggested retail price.

3237

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, 2022		December 31, 2021		($ in millions)	June 30, 2023		December 31, 2022

Vehicles	Vehicles	$	12,173	$	12,384	Vehicles	$	11,854	$	12,304
Accumulated depreciation	Accumulated depreciation	(1,657)		(1,522)		Accumulated depreciation	(1,924)		(1,860)
Investment in operating leases, net	Investment in operating leases, net	$	10,516	$	10,862	Investment in operating leases, net	$	9,930	$	10,444

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, ~~2022.~~2023.


($ in millions)	($ in millions)			($ in millions)
2022		$	824
2023	2023	1,345		2023	$	802
2024	2024	732		2024	1,157
2025	2025	246		2025	639
2026	2026	33		2026	227
2027 and thereafter		2
2027				2027	31
2028 and thereafter				2028 and thereafter	1
Total lease payments from operating leases	Total lease payments from operating leases	$	3,182	Total lease payments from operating leases	$	2,857

We recognized operating lease revenue of $392 million and $794 million for the three months and six months ended, June 30, 2023, respectively, and $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.~~2022. Depreciation expense on operating lease assets includes net remarketing gains 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)	2022		2021		2022		2021		($ in millions)	2023		2022		2023		2022
Depreciation expense on operating lease assets (excluding remarketing gains) (a)	Depreciation expense on operating lease assets (excluding remarketing gains) (a)	$	269	$	210	$	536	$	437	Depreciation expense on operating lease assets (excluding remarketing gains) (a)	$	270	$	269	$	543	$	536
Remarketing gains, net	Remarketing gains, net	(50)		(128)		(100)		(192)		Remarketing gains, net	(70)		(50)		(117)		(100)
Net depreciation expense on operating lease assets	Net depreciation expense on operating lease assets	$	219	$	82	$	436	$	245	Net depreciation expense on operating lease assets	$	200	$	219	$	426	$	436

(a)Includes variable lease payments related to excess mileage and excessive wear and tear on vehicles of $2 million during both the three months ended June 30, 2023, and 2022, and $4 million during both the ~~three months and~~ six months ended June 30, ~~2022, respectively,~~2023, and ~~$5 million and $10 million during the three months and six months ended June 30, 2021.~~2022.

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 ~~$463~~$536 million and ~~$470~~$481 million as of June 30, ~~2022,~~2023, and December 31, ~~2021,~~2022, respectively. This includes lease payment receivables of ~~$450~~$524 million and ~~$457~~$468 million at June 30, ~~2022,~~2023, and December 31, ~~2021,~~2022, respectively, and unguaranteed residual assets of $12 million at June 30, 2023, and $13 million at ~~both June 30, 2022, and~~ December 31, ~~2021, respectively.~~2022. Interest income on finance lease receivables was $9 million and $18 million for the three months and six months ended June 30, 2023, respectively, and $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,~~ and is included in interest and fees on finance receivables and loans in our Condensed Consolidated Statement of Comprehensive Income.

3338

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, ~~2022.~~2023.


($ in millions)	($ in millions)			($ in millions)
2022		$	86
2023	2023	146		2023	$	95
2024	2024	123		2024	166
2025	2025	77		2025	144
2026	2026	44		2026	106
2027 and thereafter		23
2027				2027	51
2028 and thereafter				2028 and thereafter	24
Total undiscounted cash flows	Total undiscounted cash flows	499		Total undiscounted cash flows	586
Difference between undiscounted cash flows and discounted cash flows	Difference between undiscounted cash flows and discounted cash flows	(49)		Difference between undiscounted cash flows and discounted cash flows	(62)
Present value of lease payments recorded as lease receivable	Present value of lease payments recorded as lease receivable	$	450	Present value of lease payments recorded as lease receivable	$	524

~~10.~~9. 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. Additionally, we opportunistically sell consumer automotive and credit card whole-loans to SPEs where we have a continuing involvement.

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~~sale are primarily reported as cash or retained interests (if applicable). Liabilities incurred as part of these ~~securitizations,~~sales, 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.

~~We had no~~The pretax gain on sales of financial assets into nonconsolidated VIEs was $1 million for the six months ended June 30, 2023. We had no pretax gains or losses on sales of financial assets into nonconsolidated VIEs during the three months ended June 30, 2023, and during both the three months and six months ended June 30, ~~2022, and June 30, 2021.~~2022.

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 ~~2021~~2022 Annual Report on Form 10-K for further description of our securitization activities and our involvement with VIEs.

3439

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, 2022
June 30, 2023													June 30, 2023
On-balance sheet variable interest entities	On-balance sheet variable interest entities												On-balance sheet variable interest entities
Consumer automotive	Consumer automotive	$	18,613	(b)	$	1,622	(c)	$	—	$	—		Consumer automotive	$	20,272	(b)	$	2,824	(c)	$	—	$	—

Off-balance sheet variable interest entities	Off-balance sheet variable interest entities												Off-balance sheet variable interest entities
Consumer automotive	Consumer automotive	—			—			2		2		(d)	Consumer automotive	—			—			653		653		(d)
Consumer other (e)	Consumer other (e)	—			—			40		40			Consumer other (e)	—			—			130		130
Commercial other	Commercial other	2,055		(f)	840		(g)	—		2,577		(h)	Commercial other	2,283		(f)	865		(g)	—		2,817		(h)
Total	Total	$	20,668		$	2,462		$	42	$	2,619		Total	$	22,555		$	3,689		$	783	$	3,600
December 31, 2021
December 31, 2022													December 31, 2022
On-balance sheet variable interest entities	On-balance sheet variable interest entities												On-balance sheet variable interest entities
Consumer automotive	Consumer automotive	$	18,158	(b)	$	1,162	(c)	$	—	$	—		Consumer automotive	$	20,415	(b)	$	2,553	(c)	$	—	$	—
Consumer other (e)		318			300			—		—

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

Consumer automotive													Consumer automotive	—			—			$	227	$	227	(d)
Consumer other (e)													Consumer other (e)	—			—			103		103
Commercial other	Commercial other	1,814		(f)	726		(g)	—		2,416		(h)	Commercial other	2,199		(f)	873		(g)	—		2,767		(h)
Total	Total	$	20,290		$	2,188		$	—	$	2,416		Total	$	22,614		$	3,426		$	330	$	3,097

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

(b)Includes ~~$10.6~~$10.1 billion and ~~$11.0~~$10.6 billion of assets that were not encumbered by VIE beneficial interests held by third parties at June 30, ~~2022,~~2023, and December 31, ~~2021,~~2022, respectively. Ally or consolidated affiliates hold the interests in these assets.

(c)Includes ~~$120~~$108 million and ~~$124~~$113 million of liabilities that were not obligations to third-party beneficial interest holders at June 30, ~~2022,~~2023, and December 31, ~~2021,~~2022, 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.~~Ally Credit Card.

(f)Amounts are classified as other assets except for $1$43 million and $8$38 million classified as equity securities at June 30, ~~2022,~~2023, and December 31, ~~2021,~~2022, respectively.

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

(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.

3540

Table of Contents

Notes to Condensed Consolidated Financial Statements (unaudited)

Ally Financial Inc. • Form 10-Q

Cash Flows with 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, ~~2022,~~2023, and ~~2021.~~2022. 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)	2022		2021			($ in millions)	2023		2022
Consumer automotive	Consumer automotive						Consumer automotive
Cash proceeds from transfers completed during the period	Cash proceeds from transfers completed during the period	$	2	$	—		Cash proceeds from transfers completed during the period	$	477	$	2

Servicing fees							Servicing fees	6		—

Consumer other (a)	Consumer other (a)						Consumer other (a)
Cash proceeds from transfers completed during the period	Cash proceeds from transfers completed during the period	45		—			Cash proceeds from transfers completed during the period	75		45
Servicing fees	Servicing fees	4		—			Servicing fees	5		4
Total	Total	$	51	$	—		Total	$	563	$	51

(a)Represents activity from ~~our credit card business.~~Ally Credit Card.

Delinquencies and Net Credit Losses

~~During both the three months and six months ended June 30, 2022, and 2021, we did not recognize any net credit losses from off-balance sheet securitizations where we have continuing involvement.~~

The following ~~table presents~~tables present 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					Total amount				Amount 60 days or more past due
($ in millions)	($ in millions)	June 30, 2022		December 31, 2021		June 30, 2022		December 31, 2021		($ in millions)	June 30, 2023		December 31, 2022		June 30, 2023		December 31, 2022
Whole-loan sales (a)	Whole-loan sales (a)									Whole-loan sales (a)
Consumer automotive	Consumer automotive	$	2	$	—	$	—	$	—	Consumer automotive	$	653	$	227	$	16	$	2
Consumer other	Consumer other	40		4		1		—		Consumer other	130		103		12		8
Total	Total	$	42	$	4	$	1	$	—	Total	$	783	$	330	$	28	$	10

(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.


	Net credit losses
	Three months ended June 30,				Six months ended June 30,
($ in millions)	2023		2022		2023		2022
Whole-loan sales (a)
Consumer automotive	$	3	$	—	$	4	$	—
Consumer other	8		—		13		—
Total	$	11	$	—	$	17	$	—

(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.

3641

Table of Contents

Notes to Condensed Consolidated Financial Statements (unaudited)

Ally Financial Inc. • Form 10-Q

~~11.~~10. Other Assets

The components of other assets were as follows.


($ in millions)	($ in millions)	June 30, 2022		December 31, 2021		($ in millions)	June 30, 2023		December 31, 2022

Property and equipment at cost	Property and equipment at cost	$	2,278	$	2,139	Property and equipment at cost	$	2,435	$	2,352
Accumulated depreciation	Accumulated depreciation	(1,021)		(955)		Accumulated depreciation	(1,154)		(1,076)
Net property and equipment	Net property and equipment	1,257		1,184		Net property and equipment	1,281		1,276
Investment in qualified affordable housing projects(a)	Investment in qualified affordable housing projects(a)	1,519		1,378		Investment in qualified affordable housing projects(a)	1,642		1,596
Net deferred tax assets						Net deferred tax assets	1,087		1,087
Nonmarketable equity investments	Nonmarketable equity investments	1,251		998		Nonmarketable equity investments	870		842
Net deferred tax assets		908		254
Accrued interest, fees, and rent receivables						Accrued interest, fees, and rent receivables	847		786
Goodwill	Goodwill	822		822		Goodwill	822		822
Accrued interest, fees, and rent receivables		646		600
Equity-method investments ~~(a)~~(b)	Equity-method investments ~~(a)~~(b)	583		472		Equity-method investments ~~(a)~~(b)	621		608
Restricted cash held for securitization trusts ~~(b)~~(c)	Restricted cash held for securitization trusts ~~(b)~~(c)	497		516		Restricted cash held for securitization trusts ~~(b)~~(c)	590		585

Other accounts receivable	Other accounts receivable	144		127		Other accounts receivable	155		164
Operating lease right-of-use assets						Operating lease right-of-use assets	98		111
Net intangible assets	Net intangible assets	112		129		Net intangible assets	85		98
Operating lease right-of-use assets		112		148
Restricted cash and cash equivalents ~~(c)~~(d)	Restricted cash and cash equivalents ~~(c)~~(d)	95		92		Restricted cash and cash equivalents ~~(c)~~(d)	76		66

Other assets	Other assets	936		1,337		Other assets	979		1,097
Total other assets	Total other assets	$	8,882	$	8,057	Total other assets	$	9,153	$	9,138

(a)Presented gross of the associated unfunded commitment. Refer to Note 13 for further information.

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

~~(b)~~(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.

~~(c)~~(d)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.

The total carrying value of the nonmarketable equity investments held at June 30, ~~2022,~~2023, and December 31, ~~2021,~~2022, including cumulative unrealized gains and losses, was as follows.


($ in millions)	($ in millions)	June 30, 2022		December 31, 2021		($ in millions)	June 30, 2023		December 31, 2022
FRB stock						FRB stock	$	415	$	401
FHLB stock	FHLB stock	$	548	$	289	FHLB stock	339		318
FRB stock		449		449
Equity securities without a readily determinable fair value
Equity investments without a readily determinable fair value						Equity investments without a readily determinable fair value
Cost basis at acquisition	Cost basis at acquisition	84		89		Cost basis at acquisition	92		89
Adjustments	Adjustments					Adjustments
Upward adjustments	Upward adjustments	177		183		Upward adjustments	184		177
Downward adjustments (including impairment)	Downward adjustments (including impairment)	(7)		(12)		Downward adjustments (including impairment)	(160)		(143)
Carrying amount, equity securities without a readily determinable fair value		254		260
Carrying amount, equity investments without a readily determinable fair value						Carrying amount, equity investments without a readily determinable fair value	116		123
Nonmarketable equity investments	Nonmarketable equity investments	$	1,251	$	998	Nonmarketable equity investments	$	870	$	842

During the three months and six months ended June 30, 2023, and June 30, 2022, respectively, unrealized gains and losses included in the carrying value of the nonmarketable equity investments still held as of June 30, 2023, and June 30, 2022, were as follows.


	Three months ended June 30,				Six months ended June 30,
($ in millions)	2023		2022		2023		2022
Upward adjustments	$	1	$	—	$	7	$	1
Downward adjustments (including impairment) (a)	$	—	$	—	$	(17)	$	(3)

(a)No impairment on FHLB and FRB stock was recognized during both the three months and six months ended June 30, 2023, and 2022.

3742

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 losses included in the carrying value of the nonmarketable equity investments still held as of June 30, 2022, and 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 FRB stock was recognized during both the three months and six months ended June 30, 2022, and 2021.~~

Total gain (loss) on nonmarketable equity investments, net, which includes both realized and unrealized gains and losses, ~~were~~was a loss of $11 million for the six months ended June 30, 2023, compared to gains of $3 million and $2 million for the three months and six months ended June 30, 2022, ~~respectively, compared to gains of $99 million and $103 million for the three months and six months ended June 30, 2021.~~respectively.

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		$	20	$	27	$	296	$	343
Goodwill acquired		—		—		479		479

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

Goodwill at December 31, 2022										Goodwill at December 31, 2022	$	20	$	27	$	775	$	822
Goodwill acquired										Goodwill acquired	—		—		—		—

Goodwill at June 30, 2022		$	20	$	27	$	775	$	822

Goodwill at June 30, 2023										Goodwill at June 30, 2023	$	20	$	27	$	775	$	822

(a)Includes $479 million of goodwill associated with Ally Credit Card at both June 30, ~~2022,~~2023, and December 31, ~~2021, and~~2022, $153 million of goodwill associated with Ally Lending at both June 30, ~~2022,~~2023, and December 31, ~~2021,~~2022, and $143 million of goodwill associated with Ally Invest at both June 30, ~~2022,~~2023, and December 31, ~~2021.~~2022.

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


		June 30, 2022 (a)						December 31, 2021							June 30, 2023 (a)						December 31, 2022
($ in millions)	($ in millions)	Gross intangible assets		Accumulated amortization		Net carrying value		Gross intangible assets		Accumulated amortization		Net carrying value		($ in millions)	Gross intangible assets		Accumulated amortization		Net carrying value		Gross intangible assets		Accumulated amortization		Net carrying value
Technology	Technology	$	122	$	(45)	$	77	$	122	$	(36)	$	86	Technology	$	122	$	(61)	$	61	$	122	$	(53)	$	69
Customer lists	Customer lists	58		(47)		11		58		(42)		16		Customer lists	58		(54)		4		58		(51)		7
Purchased credit card relationships	Purchased credit card relationships	25		(2)		23		25		—		25		Purchased credit card relationships	25		(6)		19		25		(4)		21

Trademarks	Trademarks	2		(1)		1		2		—		2		Trademarks	2		(1)		1		2		(1)		1

Total intangible assets	Total intangible assets	$	207	$	(95)	$	112	$	207	$	(78)	$	129	Total intangible assets	$	207	$	(122)	$	85	$	207	$	(109)	$	98

(a)We expect to recognize amortization expense of ~~$15~~$12 million during the remainder of ~~2022, $25 million in~~ 2023, ~~$18~~$19 million in 2024, ~~$14 million in 2025,~~ and $14 million ~~in 2026.~~per year for 2025, 2026, and 2027.

~~12.~~11. Deposit Liabilities

Deposit liabilities consisted of the following.


($ in millions)	($ in millions)	June 30, 2022		December 31, 2021		($ in millions)	June 30, 2023		December 31, 2022

Noninterest-bearing deposits	Noninterest-bearing deposits	$	185	$	150	Noninterest-bearing deposits	$	160	$	185
Interest-bearing deposits	Interest-bearing deposits					Interest-bearing deposits
Savings, money market, and checking accounts	Savings, money market, and checking accounts	103,587		102,455		Savings, money market, and checking accounts	98,841		110,776
Certificates of deposit	Certificates of deposit	36,629		38,953		Certificates of deposit	55,309		41,336

Total deposit liabilities	Total deposit liabilities	$	140,401	$	141,558	Total deposit liabilities	$	154,310	$	152,297

At June 30, ~~2022,~~2023, and December 31, ~~2021,~~2022, certificates of deposit included ~~$6.1~~$6.9 billion and ~~$7.2~~$5.6 billion, respectively, of those in denominations in excess of $250 ~~thousand federal insurance limits.~~thousand.

3843

Table of Contents

Notes to Condensed Consolidated Financial Statements (unaudited)

Ally Financial Inc. • Form 10-Q

~~13.~~12. Debt

Short-Term Borrowings

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


		June 30, 2022						December 31, 2021							June 30, 2023						December 31, 2022
($ in millions)	($ in millions)	Unsecured		Secured (a)		Total		Unsecured		Secured (a)		Total		($ in millions)	Unsecured		Secured (a)		Total		Unsecured		Secured (a)		Total

Federal Home Loan Bank	Federal Home Loan Bank	$	—	$	6,775	$	6,775	$	—	$	—	$	—	Federal Home Loan Bank	$	—	$	1,200	$	1,200	$	—	$	1,900	$	1,900
Other (b)		—		1,000		1,000		—		—		—

Securities sold under agreements to repurchase														Securities sold under agreements to repurchase	—		994		994		—		499		499

Total short-term borrowings	Total short-term borrowings	$	—	$	7,775	$	7,775	$	—	$	—	$	—	Total short-term borrowings	$	—	$	2,194	$	2,194	$	—	$	2,399	$	2,399

(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)Represents~~We periodically enter into term repurchase agreements—short-term borrowing agreements in which we sell securities to one or more investors while simultaneously committing to repurchase them at a ~~loan participation agreement~~specified future date, at the stated price plus accrued interest. As of June 30, 2023, the securities sold under agreements to repurchase consisted of $994 million of agency mortgage-backed residential debt securities, of which $742 million are set to mature within 30 days, and $252 million are set to mature within 31 to 60 days. Refer to Note 6 and Note 21 for further details.

The primary risk associated with these repurchase agreements is that the counterparty will be unable to perform under the terms of the contract. As the borrower, we are exposed to the excess market value of the securities pledged over the amount borrowed. Daily mark-to-market collateral management is designed to limit this risk to the initial margin. However, should a counterparty declare bankruptcy or become insolvent, we may incur additional delays and costs. In some instances, we may place or receive cash collateral with counterparties under collateral arrangements associated with our repurchase agreements. At June 30, 2023, we placed cash collateral of $3 million subsequent to the execution of the repurchase agreements, and received cash collateral of $2 million. At December 31, 2022, we placed cash collateral of $1 million subsequent to the execution of the repurchase agreements, and we did not ~~meet the requirements for derecognition and was therefore accounted for as a secured borrowing.~~receive any collateral.

Long-Term Debt

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


															June 30, 2023						December 31, 2022
		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	$	798	$	2,776	$	3,574	$	1,028	$	4,841	$	5,869	Due within one year	$	1,948	$	3,208	$	5,156	$	2,023	$	2,395	$	4,418
Due after one year	Due after one year	8,377		5,033		13,410		8,382		2,778		11,160		Due after one year	8,820		6,165		14,985		8,014		5,330		13,344
Total long-term debt (b)	Total long-term debt (b)	$	9,175	$	7,809	$	16,984	$	9,410	$	7,619	$	17,029	Total long-term debt (b)	$	10,768	$	9,373	$	20,141	$	10,037	$	7,725	$	17,762

(a)Includes basis adjustments related to the application of hedge accounting. Refer to Note 1918 for additional information.

(b)Includes advances, net of hedge basis adjustments, from the FHLB of Pittsburgh of ~~$6.3~~$6.7 billion and $5.3 billion at ~~both~~ June 30, ~~2022,~~2023, and December 31, ~~2021.~~2022, respectively.

The following table presents the scheduled remaining maturity of long-term debt at June 30, ~~2022,~~2023, 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)	2022		2023		2024		2025		2026		2027 and thereafter		Total		($ in millions)	2023		2024		2025		2026		2027		2028 and thereafter		Total
Unsecured	Unsecured															Unsecured
Long-term debt	Long-term debt	$	31	$	2,082	$	1,479	$	2,391	$	25	$	4,068	$	10,076	Long-term debt	$	1,258	$	1,479	$	2,486	$	141	$	1,537	$	4,730	$	11,631
Original issue discount	Original issue discount	(27)		(59)		(66)		(72)		(80)		(597)		(901)		Original issue discount	(31)		(68)		(74)		(82)		(95)		(513)		(863)
Total unsecured	Total unsecured	4		2,023		1,413		2,319		(55)		3,471		9,175		Total unsecured	1,227		1,411		2,412		59		1,442		4,217		10,768
Secured	Secured															Secured
Long-term debt	Long-term debt	2,067		2,002		2,423		892		340		85		7,809		Long-term debt	1,673		3,114		2,061		1,814		439		272		9,373
Total long-term debt	Total long-term debt	$	2,071	$	4,025	$	3,836	$	3,211	$	285	$	3,556	$	16,984	Total long-term debt	$	2,900	$	4,525	$	4,473	$	1,873	$	1,881	$	4,489	$	20,141

3944

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.


		June 30, 2022				December 31, 2021
($ in millions)	($ in millions)	Total (a)		Ally Bank		Total (a)		Ally Bank		($ in millions)	June 30, 2023		December 31, 2022

Consumer mortgage finance receivables	Consumer mortgage finance receivables	$	19,210	$	19,210	$	17,941	$	17,941	Consumer mortgage finance receivables	$	19,187		$	19,771
Consumer automotive finance receivables	Consumer automotive finance receivables	9,960		9,960		9,122		9,122		Consumer automotive finance receivables	12,121			11,759
Commercial finance receivables (b)		5,000		5,000		10		10
Investment securities		3,386		3,386		—		—
Credit card receivables		—		—		347		347
Commercial finance receivables										Commercial finance receivables	5,568			4,210
Investment securities (amortized cost of $5,253 and $4,288) (a)										Investment securities (amortized cost of $5,253 and $4,288) (a)	4,371			3,525

Total assets restricted as collateral (c) (d)		$	37,556	$	37,556	$	27,420	$	27,420

Total assets restricted as collateral (b) (c) (d)										Total assets restricted as collateral (b) (c) (d)	$	41,247		$	39,265
Secured debt (e)	Secured debt (e)	$	15,584	$	15,584	$	7,619	$	7,619	Secured debt (e)	$	11,567		$	10,124

(a)~~Ally Bank is a component~~A portion of the ~~total column.~~restricted investment securities at June 30, 2023, and December 31, 2022, was restricted under repurchase agreements. Refer to the section above titled Short-Term Borrowings for information on the repurchase agreements.

(b)~~Includes pledged commercial finance receivables related to a participation agreement at June 30, 2022.~~All restricted assets are those of Ally Bank.

(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 ~~$26.6~~$28.1 billion and ~~$18.0~~$27.0 billion at June 30, ~~2022,~~2023, and December 31, ~~2021,~~2022, respectively. These assets were primarily composed ~~primarily~~ of consumer mortgage finance receivables and ~~loans.~~loans, as well as real-estate-backed loans within our Automotive Finance and Corporate Finance businesses, and non-agency mortgage-backed securities. Ally Bank has access to the FRB Discount Window and had assets pledged and restricted as collateral to the FRB totaling $2.3 billion and $2.4 billion at ~~both~~ June 30, ~~2022,~~2023, and December 31, ~~2021.~~2022, respectively. 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.

(d)Excludes restricted cash and cash reserves for securitization trusts recorded within other assets on the Condensed Consolidated Balance Sheet. Refer to Note 1110 for additional information.

(e)Includes ~~$7.8~~$2.2 billion and $2.4 billion of short-term borrowings at June 30, ~~2022.~~2023, and December 31, 2022, respectively.

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

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


($ in millions)	($ in millions)	June 30, 2022		December 31, 2021		($ in millions)	June 30, 2023		December 31, 2022
Unfunded commitments for investment in qualified affordable housing projects	Unfunded commitments for investment in qualified affordable housing projects	$	836	$	724	Unfunded commitments for investment in qualified affordable housing projects	$	861	$	869
Accounts payable	Accounts payable	534		584		Accounts payable	515		435
Employee compensation and benefits	Employee compensation and benefits	341		512		Employee compensation and benefits	303		424
Deferred revenue	Deferred revenue	174		176		Deferred revenue	165		169
Reserves for insurance losses and loss adjustment expenses(a)						Reserves for insurance losses and loss adjustment expenses(a)	152		119
Operating lease liabilities	Operating lease liabilities	136		175		Operating lease liabilities	122		137
Reserves for insurance losses and loss adjustment expenses(a)		131		122

Other liabilities	Other liabilities	647		460		Other liabilities	513		495
Total accrued expenses and other liabilities	Total accrued expenses and other liabilities	$	2,799	$	2,753	Total accrued expenses and other liabilities	$	2,631	$	2,648

~~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(a)Refer 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 dividendsNote 4 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)further information.

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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 B14. 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.

~~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. For additional information regarding our preferred stock, refer to Note 17 to the Consolidated Financial Statements in our 2022 Annual Report on Form 10-K.


		June 30, 2022			June 30, 2023		December 31, 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		April 22, 2021
Carrying value ($ in millions)	Carrying value ($ in millions)	$	1,335	Carrying value ($ in millions)	$	1,335	$	1,335
Par value (per share)	Par value (per share)	$	0.01	Par value (per share)	$	0.01	$	0.01
Liquidation preference (per share)	Liquidation preference (per share)	$	1,000	Liquidation preference (per share)	$	1,000	$	1,000
Number of shares authorized	Number of shares authorized	1,350,000		Number of shares authorized	1,350,000		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		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%		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%		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		June 2, 2021
Carrying value ($ in millions)	Carrying value ($ in millions)	$	989	Carrying value ($ in millions)	$	989	$	989
Par value (per share)	Par value (per share)	$	0.01	Par value (per share)	$	0.01	$	0.01
Liquidation preference (per share)	Liquidation preference (per share)	$	1,000	Liquidation preference (per share)	$	1,000	$	1,000
Number of shares authorized	Number of shares authorized	1,000,000		Number of shares authorized	1,000,000		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		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%		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%		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.

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

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


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

Balance at April 1, 2021		$	53	$	20	$	65	$	(111)	$	27
Net change		206		—		(17)		—		189
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)	Balance at April 1, 2022	$	(1,726)	$	20	$	30	$	(115)	$	(1,791)
Net change	Net change	(1,214)		(1)		(3)		—		(1,218)		Net change	(1,214)		(1)		(3)		—		(1,218)
Balance at June 30, 2022 (c)		$	(2,940)	$	19	$	27	$	(115)	$	(3,009)
Balance at June 30, 2022												Balance at June 30, 2022	$	(2,940)	$	19	$	27	$	(115)	$	(3,009)
Balance at April 1, 2023												Balance at April 1, 2023	$	(3,811)	$	18	$	17	$	—	$	(3,776)
Net change												Net change	(70)		3		(20)		—		(87)
Balance at June 30, 2023												Balance at June 30, 2023	$	(3,881)	$	21	$	(3)	$	—	$	(3,863)

(a)Represents the after-tax difference between the fair value and amortized cost of our available-for-sale securities portfolio. Refer to Note 6 for additional information.

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

(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 toDuring 2022, we settled our qualified defined benefit pension ~~plan recorded~~plan. Refer to Note 18 to the Consolidated Financial Statements in ~~accumulated other comprehensive income would be recognized in net income from continuing operations of~~ our ~~Condensed Consolidated Statement of Comprehensive Income.~~2022 Annual Report on Form 10-K for additional information.

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Ally Financial Inc. • Form 10-Q


		Six months ended June 30,											Six months ended June 30,
($ in millions)	($ 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)		($ in millions)	Unrealized losses on investment securities (a)		Translation adjustments and net investment hedges (b)		Cash flow hedges (b)		Defined benefit pension plans (c)		Accumulated other comprehensive 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	Balance at January 1, 2022	$	(95)	$	19	$	35	$	(117)	$	(158)	Balance at January 1, 2022	$	(95)	$	19	$	35	$	(117)	$	(158)
Net change	Net change	(2,845)		—		(8)		2		(2,851)		Net change	(2,845)		—		(8)		2		(2,851)
Balance at June 30, 2022 (c)		$	(2,940)	$	19	$	27	$	(115)	$	(3,009)
Balance at June 30, 2022												Balance at June 30, 2022	$	(2,940)	$	19	$	27	$	(115)	$	(3,009)
Balance at January 1, 2023												Balance at January 1, 2023	$	(4,095)	$	18	$	18	$	—	$	(4,059)
Net change												Net change	214		3		(21)		—		196
Balance at June 30, 2023												Balance at June 30, 2023	$	(3,881)	$	21	$	(3)	$	—	$	(3,863)

(a)Represents the after-tax difference between the fair value and amortized cost of our available-for-sale securities portfolio. Refer to Note 6 for additional information.

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

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


Three months ended June 30, 2023 ($ in millions)	Before tax			Tax effect			After tax
Investment securities
Net unrealized losses arising during the period	$	(91)		$	21		$	(70)


Translation adjustments
Net unrealized gains arising during the period	6			(1)			5
Net investment hedges (a)
Net unrealized losses arising during the period	(3)			1			(2)
Cash flow hedges (a)
Net unrealized losses arising during the period	(22)			6			(16)
Less: Net realized gains reclassified to income from continuing operations	5		(b)	(1)		(c)	4
Net change	(27)			7			(20)




Other comprehensive loss	$	(115)		$	28		$	(87)

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

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

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


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 ~~19.~~18.

(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, 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 — 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

Table of Contents

Notes to Condensed Consolidated Financial Statements (unaudited)

Ally Financial Inc. • Form 10-Q


Six months ended June 30, 2023 ($ in millions)	Before tax			Tax effect			After tax
Investment securities
Net unrealized gains arising during the period	$	286		$	(68)		$	218
Less: Net realized gains reclassified to income from continuing operations	5		(a)	(1)		(b)	4

Net change	281			(67)			214
Translation adjustments
Net unrealized gains arising during the period	6			(1)			5



Net investment hedges (c)
Net unrealized losses arising during the period	(3)			1			(2)



Cash flow hedges (c)
Net unrealized losses arising during the period	(18)			5			(13)
Less: Net realized gains reclassified to income from continuing operations	10		(d)	(2)		(b)	8

Net change	(28)			7			(21)





Other comprehensive income	$	256		$	(60)		$	196

(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.~~18.

(d)Includes gains reclassified to 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~~


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 19.~~18.

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

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Notes to Condensed Consolidated Financial Statements (unaudited)

Ally Financial Inc. • Form 10-Q

~~17.~~16. 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,					Three months ended June 30,				Six months ended June 30,
($ in millions, except per share data; shares in thousands) (a)	($ in millions, except per share data; shares in thousands) (a)	2022		2021		2022		2021		($ in millions, except per share data; shares in thousands) (a)	2023		2022		2023		2022
Net income from continuing operations	Net income from continuing operations	$	482	$	899	$	1,137	$	1,695	Net income from continuing operations	$	329	$	482	$	649	$	1,137
Preferred stock dividends — Series B	Preferred stock dividends — Series B	(16)		—		(32)		—		Preferred stock dividends — Series B	(16)		(16)		(32)		(32)
Preferred stock dividends — Series C	Preferred stock dividends — Series C	(12)		—		(24)		—		Preferred stock dividends — Series C	(12)		(12)		(24)		(24)
Net income from continuing operations attributable to common stockholders	Net income from continuing operations attributable to common stockholders	$	454	$	899	$	1,081	$	1,695	Net income from continuing operations attributable to common stockholders	$	301	$	454	$	593	$	1,081
Income from discontinued operations, net of tax		—		1		—		1
Loss from discontinued operations, net of tax										Loss from discontinued operations, net of tax	—		—		(1)		—
Net income attributable to common stockholders	Net income attributable to common stockholders	$	454	$	900	$	1,081	$	1,696	Net income attributable to common stockholders	$	301	$	454	$	592	$	1,081
Basic weighted-average common shares outstanding (b)	Basic weighted-average common shares outstanding (b)	322,057		370,412		328,830		372,807		Basic weighted-average common shares outstanding (b)	303,684		322,057		303,173		328,830
Diluted weighted-average common shares outstanding (b)	Diluted weighted-average common shares outstanding (b)	324,027		373,029		330,882		375,265		Diluted weighted-average common shares outstanding (b)	304,646		324,027		304,050		330,882
Basic earnings per common share	Basic earnings per common share									Basic earnings per common share
Net income from continuing operations	Net income from continuing operations	$	1.41	$	2.43	$	3.29	$	4.55	Net income from continuing operations	$	0.99	$	1.41	$	1.96	$	3.29

Net income	Net income	$	1.41	$	2.43	$	3.29	$	4.55	Net income	$	0.99	$	1.41	$	1.95	$	3.29
Diluted earnings per common share	Diluted earnings per common share									Diluted earnings per common share
Net income from continuing operations	Net income from continuing operations	$	1.40	$	2.41	$	3.27	$	4.52	Net income from continuing operations	$	0.99	$	1.40	$	1.95	$	3.27

Net income	Net income	$	1.40	$	2.41	$	3.27	$	4.52	Net income	$	0.99	$	1.40	$	1.95	$	3.27

(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.

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

Ally is ~~currently~~ subject to enhanced prudential standards that ~~were~~have been established by the FRB under the Dodd-Frank ~~Act. Targeted amendments to the Dodd-Frank~~ Act, ~~and other financial-services laws were enacted through~~as amended by 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 assignedapplied to Category ~~I. The assignment of other banking organizations to~~IV firms under 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~~Tailoring Rules. As a Category IV firm, ~~and, as such,~~Ally 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~~(provided that our average wSTWF continues to remain under $50 ~~billion,~~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 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~~Even so, we are 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 based on risks to the U.S. economy. Further, we ~~remain~~are 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. While a resubmission is pending, without prior approval of the FRB, we would generally be prohibited from paying dividends, repurchasing our common stock, or making other capital distributions. In addition, to satisfy the FRB in its review of our capital plan, we may be required to further cease or limit these capital distributions or to issue capital instruments that could be dilutive to stockholders. The FRB also may prevent us from maintaining or expanding lending or other business activities.

Basel Capital Framework

The FRB and other U.S. banking agencies have adopted risk-based and leverage capital ~~standards~~rules 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~~On top of the minimum risk-based capital ratios, Ally and Ally Bank are subject to a capital conservation buffer requirement, which ~~for~~ must be satisfied entirely with capital that qualifies as

Table of Contents

Notes to Condensed Consolidated Financial Statements (unaudited)

Ally ~~was 3.5% and for Ally Bank was 2.5% as of June 30, 2022, as further described in the next paragraph.~~Financial Inc. • Form 10-Q

Common Equity Tier 1 capital. 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~~ While the capital ~~and liquidity requirements that apply~~conservation buffer requirement for Ally Bank is fixed at 2.5% of RWAs, the capital conservation buffer requirement for a Category IV firm like Ally is equal to ~~large U.S. banking organizations. In March 2020, the FRB issued a final rule to more closely align forward-looking~~its 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.~~buffer requirement. 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. The final rule also made several changes to the CCAR process effective May 2020, such as eliminating the 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 requirementturn, 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 RWAs. ~~For a Category IV firm like Ally, the capital conservation buffer requirement comprises~~As of June 30, 2023, the stress capital buffer ~~requirement. The capital conservation buffer~~ requirement ~~applicable to Ally’s depository-institution subsidiary,~~for Ally ~~Bank, continues to be a fixed~~was 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. Ally received an updated preliminary stress capital buffer requirement from the FRB in June 2022, which was determined to be 2.5% and is scheduled to become effective on October 1, 2022.

Under applicable capital 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. Since Ally and Ally Bank are not subject to the advanced approaches risk-based capital rules, we elected to apply a one-time option to exclude most components of accumulated other comprehensive income from regulatory capital. As of June 30, 2023, and December 31, 2022, Ally had $3.9 billion and $4.1 billion, respectively, of accumulated other comprehensive losses, net of applicable income taxes, that were excluded from Common Equity Tier 1 capital. Refer to Note 15 for additional details about our accumulated other comprehensive loss.

Failure to satisfy regulatory-capital requirements could result in significant sanctions—such as bars or other limits on capital distributions and discretionary bonuses to executive officers, limitations on acquisitions and new activities, restrictions on our acceptance of brokered deposits, a loss of our status as an FHC, or informal or formal enforcement and other supervisory actions—and could have a significant adverse effect on the Consolidated Financial Statements or the business, results of operations, financial condition, or prospects of Ally and Ally Bank.

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 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~~Although 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. At both June 30, ~~2022,~~2023, and December 31, ~~2021,~~2022, Ally Bank ~~was~~met the capital ratios required to be well capitalized under the PCA framework.

Under FDICIA and the PCA framework, insured depository institutions such as Ally Bank must be well capitalized or, with a waiver from the FDIC, adequately capitalized 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. Brokered deposits totaled ~~$7.0~~$13.7 billion at June 30, ~~2022,~~2023, which represented ~~5.0%~~8.9% of Ally Bank’s total deposits.

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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, 2022				December 31, 2021				Required minimum (a)		Well-capitalized minimum			June 30, 2023				December 31, 2022				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.	$	14,650	9.62	%	$	15,143	10.34	%	4.50	%	(b)		Ally Financial Inc.	$	14,791	9.29	%	$	14,592	9.27	%	4.50	%	(b)
Ally Bank	Ally Bank	17,349		11.98		17,253		12.39		4.50		6.50	%	Ally Bank	17,298		11.44		17,011		11.38		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.	$	16,925	11.11	%	$	17,403	11.89	%	6.00	%	6.00	%	Ally Financial Inc.	$	17,054	10.72	%	$	16,867	10.72	%	6.00	%	6.00	%
Ally Bank	Ally Bank	17,349		11.98		17,253		12.39		6.00		8.00		Ally Bank	17,298		11.44		17,011		11.38		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.	$	19,409	12.75	%	$	19,724	13.47	%	8.00	%	10.00	%	Ally Financial Inc.	$	19,897	12.50	%	$	19,209	12.21	%	8.00	%	10.00	%
Ally Bank	Ally Bank	19,166		13.24		18,995		13.64		8.00		10.00		Ally Bank	19,202		12.70		18,888		12.64		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.	$	16,925	9.10	%	$	17,403	9.67	%	4.00	%	(b)		Ally Financial Inc.	$	17,054	8.59	%	$	16,867	8.65	%	4.00	%	(b)
Ally Bank	Ally Bank	17,349		9.83		17,253		10.12		4.00		5.00	%	Ally Bank	17,298		9.18		17,011		9.23		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, 2022, and December 31, 2021,~~ and Ally Bank ~~was~~were required to maintain a minimum capital conservation buffer of 2.5% at both June 30, ~~2022,~~2023, and December 31, ~~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.~~2022.

(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~~CECL. Refer to Note 1 to the Consolidated Financial Statements in our ~~2021~~2022 Annual Report on Form ~~10-K. In December 2018,~~10-K for additional information about our allowance for loan losses accounting policy. Under a rule finalized by 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 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 elected this alternative option instead of the one described in the December 2018 rule. As a result, under the final rule, we delayed recognizing the estimated impact of CECL on regulatory capital until after a two-year deferral period, which for us extended through December 31, 2021. Beginning on January 1, 2022, we 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 deferred and 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, ~~2022,~~2023, the total deferred impact on Common Equity Tier 1 capital related to our adoption of CECL was ~~$887~~$591 million.

In April 2023, in a statement accompanying the review of the FRB’s supervision and regulation of SVB, FRB Vice Chair for Supervision Barr highlighted a plan to revisit the Tailoring Rules and develop stronger capital, liquidity, stress-testing, and other standards for Category IV firms like Ally. In July 2023, the U.S. banking agencies issued a proposed rule to customize and implement revisions to the global Basel III capital framework (commonly known as the Basel III endgame or as Basel IV). For regulatory capital, the proposed rule would eliminate the effect of the Tailoring Rules by requiring the recognition of most elements of accumulated other comprehensive income and loss and the application of deductions, limitations, and criteria for specified capital investments, minority interests, and TLAC holdings. For each of the risk-based capital ratios, a large banking organization like Ally would calculate and be bound by the lower of two alternatives: one version of the ratio based on an expanded risk-based approach prescribed in the proposed rule and one version of the ratio based on the standardized approach as modified by the proposed rule. All capital buffer requirements, including the stress capital buffer requirement, would apply regardless of whether the expanded risk-based approach or the standardized approach produces the lower ratio. Under the expanded risk-based approach, total RWAs would equal the sum of the RWAs for credit risk, equity risk, operational risk, market risk, and CVA risk as set forth in the proposed rule minus any amount of the banking organization’s adjusted allowance for credit losses that is not included in Tier 2 capital and any amount of allocated transfer risk reserves. Under the standardized approach, total RWAs would be calculated using the existing rules with a revised methodology for determining market risk-weighted assets and a required application of the standardized approach for counterparty credit risk for derivative exposures. Category IV firms would be further required under the proposed rule to project their risk-based capital ratios under baseline conditions in their capital plans and related reports using the RWA-calculation approach that results in their binding risk-based capital ratios as of the start of the projection horizon. The proposed rule also would roll back additional elements of the Tailoring Rules by applying to Category IV firms the supplementary leverage ratio, the countercyclical capital buffer, and enhanced public disclosure and reporting requirements. Whether and when a final rule may be adopted and take effect, as well as what changes to the proposed rule may be reflected in such a final rule after the comment period, remain unclear. Under the proposed rule, however, a three-year transition period from July 1, 2025, to June 30, 2028, would apply to the recognition of accumulated other comprehensive income and loss in regulatory capital and the use of the expanded risk-based approach. Ally is still assessing the impact of the proposed rule, but the U.S. banking agencies estimate that Category IV firms would experience a 6 percent increase in RWAs and in binding Common Equity Tier 1 capital requirements. The actual impact on Ally could differ meaningfully from these estimates. Beyond this proposed rule, more stringent and less tailored liquidity, stress-testing, and other standards for Category IV firms like Ally may be forthcoming, including those that may (1) impose a minimum TLAC requirement, (2) reinstate the LCR and require more rigorous liquidity stress testing,

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Notes to Condensed Consolidated Financial Statements (unaudited)

Ally Financial Inc. • Form 10-Q

(3) return Ally to supervisory stress testing on an annual cycle, and (4) resume resolution planning for Ally and its significant legal entities under the U.S. Bankruptcy Code and other applicable insolvency laws.

Capital Planning and Stress Tests

Under the ~~tailoring framework described earlier in the section titled~~ ~~Basel Capital Framework~~,Tailoring Rules, 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 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.

~~Table of Contents~~

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

~~Ally Financial Inc. • Form 10-Q~~

~~In January 2021, the FRB issued a final rule effective April 5, 2021, to~~The Tailoring Rules align ~~its~~ capital planning, supervisory stress testing, 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~~for large banking organizations like Ally. As a Category IV ~~firms are generally no longer required~~firm, Ally is expected 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~~Ally would not generally be subject to the supervisory stress test. Refer to the section titled Basel Capital Framework above for further discussion about our stress capital buffer requirements. During a year in which ~~a Category IV firm~~Ally does not undergo a supervisory stress test, ~~the firm~~we would receive an updated stress capital buffer requirement ~~that reflects its~~only to reflect our updated planned common-stock dividends. ~~The final rule also includes reporting and other changes consistent with the tailoring framework.~~ Ally ~~did not opt into the 2021 supervisory stress test but~~ was subject to the 2022 supervisory stress ~~test.~~

~~We submitted our 2021 capital plan on April 5, 2021, which included planned capital distributions~~test and did not elect to common stockholders through share repurchases and cash dividends and other capital actions over the nine-quarter planning 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 increaseparticipate 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 15 for additional details about these instruments and capital actions. In June 2021, we submitted an updated capital plan to the FRB reflecting these capital actions and increases in our stock-repurchase program and common-stock dividend. This updated capital plan was used by the FRB to recalculate Ally’s final2023 supervisory stress capital buffer requirement, which was announced in August 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 was determined to be 2.5% and is scheduled to become effective on October 1, 2022.test.

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. During the year ended December 31, 2022, we repurchased $1.65 billion of common stock under our stock-repurchase program. Since the commencement of our initial stock-repurchase program in the third quarter of 2016, we have reduced the number of outstanding shares of our common stock by 38%, from 484 million as of June 30, 2016, to 302 million as of June 30, 2023. At this time, the Board has not authorized a stock-repurchase program for 2023.

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 was determined to be 2.5% and reflected a decline of 100 basis points relative to our prior requirement. The updated 2.5% stress capital buffer requirement was finalized in August 2022 and became effective on October 1, 2022. In February 2023, we accessed the unsecured debt capital markets and issued $500 million of additional subordinated notes, which qualify as Tier 2 capital for Ally under U.S. Basel III. We submitted our 2023 capital plan to the FRB on April 5, 2023, and received in June 2023 an updated preliminary stress capital buffer requirement that remained unchanged at 2.5%. The 2.5% stress capital buffer requirement was finalized in July 2023, and will become effective on October 1, 2023.

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)~~FRB and any changes to capital, liquidity, and other regulatory requirements that may be proposed or adopted by the U.S. banking agencies), ~~impacts related to~~ the ~~COVID-19 pandemic,~~taxation of share repurchases, 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.

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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.


		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)			Number of common shares outstanding		Cash dividends declared per common share (b)
($ 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
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
Third quarter	Third quarter	679		13,055	362,639	349,599	0.25		Third quarter	415		12,468	312,781	300,335	0.30
Fourth quarter	Fourth quarter	594		12,046	349,599	337,941	0.25		Fourth quarter	51		1,731	300,335	299,324	0.30
2022
2023									2023
First quarter	First quarter	$	584	12,548	337,941	327,306	$	0.30	First quarter	$	27	836	299,324	300,821	$	0.30
Second quarter	Second quarter	600		15,031	327,306	312,781	0.30		Second quarter	2		58	300,821	301,619	0.30

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

(b)Our aggregate common-stock dividends and share repurchases in the first and second quarters of 2021 were limited by actions taken by the FRB to address the economic uncertainty from the COVID-19 pandemic. Refer to Note 20 to the Consolidated Financial Statements in our 2021 Annual Report on Form 10-K for further details about these actions.

~~(c)~~On July ~~14, 2022,~~17, 2023, our Board declared a quarterly cash dividend of $0.30 per share on all common stock, payable on August 15, ~~2022,~~2023, to stockholders of record at the close of business on August 1, ~~2022.~~2023. Refer to Note 2524 for further information regarding this common-stock dividend.

~~19.~~18. 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~~using 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 that do not qualify for hedge accounting 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 fixed-rate held-for-investment consumer automotive loan 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, 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 have the ability to execute economic hedges, which ~~may~~could 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.

Investment Risk

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

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Notes to Condensed Consolidated Financial Statements (unaudited)

Ally Financial Inc. • Form 10-Q

Credit Risk

We enter into various retail automotive-loan purchase agreements with certain counterparties. As part of those agreements, 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. 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~~require 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, ~~2022,~~2023, or ~~2021.~~

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

~~Ally Financial Inc. • Form 10-Q~~

2022.

We placed ~~cash and~~ noncash collateral totaling $3$678 million, ~~and $304 million, respectively,~~ supporting our derivative positions at June 30, ~~2022,~~2023, compared to $2 million and ~~$203~~$384 million of cash and noncash collateral at December 31, ~~2021,~~2022, respectively, in accounts maintained by counterparties. These amounts include noncash 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~~$29 million and $4$23 million in accounts maintained by counterparties at June 30, ~~2022,~~2023, and December 31, ~~2021,~~2022, respectively. ~~This amount includes collateral received from clearinghouses and excludes~~These amounts exclude 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.

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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, 2022						December 31, 2021							June 30, 2023						December 31, 2022
		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	$	—	$	—	$	24,780	$	—	$	—	$	17,039	Swaps	$	—	$	—	$	38,674	$	—	$	—	$	30,619

Purchased options														Purchased options	32		—		6,000		22		—		2,800

Foreign exchange contracts	Foreign exchange contracts													Foreign exchange contracts
Forwards	Forwards	—		1		151		—		2		171		Forwards	—		—		163		—		1		151
Total derivatives designated as accounting hedges	Total derivatives designated as accounting hedges	—		1		24,931		—		2		17,210		Total derivatives designated as accounting hedges	32		—		44,837		22		1		33,570
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	1		—		168		1		—		223		Futures and forwards	1		—		99		—		—		37
Written options	Written options	2		4		273		5		2		580		Written options	1		—		126		—		—		79

Total interest rate risk	Total interest rate risk	3		4		441		6		2		803		Total interest rate risk	2		—		225		—		—		116
Foreign exchange contracts	Foreign exchange contracts													Foreign exchange contracts

Futures and forwards	Futures and forwards	—		2		156		—		1		154		Futures and forwards	—		—		58		—		1		147

Total foreign exchange risk	Total foreign exchange risk	—		2		156		—		1		154		Total foreign exchange risk	—		—		58		—		1		147
Credit contracts (a)	Credit contracts (a)													Credit contracts (a)
Other credit derivatives	Other credit derivatives	—		48		n/a		—		56		n/a		Other credit derivatives	—		19		n/a		—		39		n/a
Total credit risk	Total credit risk	—		48		n/a		—		56		n/a		Total credit risk	—		19		n/a		—		39		n/a
Equity contracts	Equity contracts													Equity contracts

Written options	Written options	—		—		—		—		1		2		Written options	—		3		—		—		1		—
Purchased options	Purchased options	1		—		—		1		—		—		Purchased options	1		—		—		1		—		—
Total equity risk	Total equity risk	1		—		—		1		1		2		Total equity risk	1		3		—		1		1		—
Total derivatives not designated as accounting hedges	Total derivatives not designated as accounting hedges	4		54		597		7		60		959		Total derivatives not designated as accounting hedges	3		22		283		1		41		263
Total derivatives	Total derivatives	$	4	$	55	$	25,528	$	7	$	62	$	18,169	Total derivatives	$	35	$	22	$	45,120	$	23	$	42	$	33,833

n/a = not applicable

(a)The maximum potential amount of undiscounted future payments that could be required under these credit derivatives was ~~$102~~$47 million and ~~$119~~$82 million as of June 30, ~~2022,~~2023, and December 31, ~~2021,~~2022, respectively.

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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)		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)
																					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)

	($ in millions)			June 30, 2022			December 31, 2021			June 30, 2022			December 31, 2021			June 30, 2022				December 31, 2021			($ in millions)			June 30, 2023				December 31, 2022			June 30, 2023				December 31, 2022			June 30, 2023	December 31, 2022
Assets																			Assets
Available-for-sale securities (b)		$	5,499		$	5,119		$	(98)		$	(14)		$	(127)		$	(30)	Available-for-sale securities (b)		$	14,840		$	11,265			$	(277)		$	(180)			$	(173)		$	(181)
Finance receivables and loans, net (c)	Finance receivables and loans, net (c)	46,152			44,098			(501)			(37)			(83)			46		Finance receivables and loans, net (c)		46,875			46,390				(432)			(617)				(38)			(57)
Liabilities	Liabilities																		Liabilities

Long-term debt	Long-term debt	$	6,672		$	7,213		$	106		$	110		$	110		$	110	Long-term debt		$	7,722		$	7,697			$	105		$	112			$	105		$	120

(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)These amounts include the amortized cost basis and unallocated basis adjustments of closed portfolios of available-for-sale securities used to designate hedging relationships in which the hedged item is the ~~last layer expected~~stated amount of assets in the closed portfolios anticipated to be ~~remaining at~~outstanding for the ~~end of the hedging relationship.~~designated hedge period. At June 30, ~~2022,~~2023, and December 31, ~~2021,~~2022, the amortized cost basis and unallocated basis adjustments of the closed portfolios used in these hedging relationships was ~~$3.8~~$13.4 billion and ~~$3.9~~$10.0 billion, ~~respectively.~~respectively, of which $13.1 billion and $9.7 billion, respectively, represents the amortized cost basis and unallocated basis adjustments of closed portfolios designated in an active hedge relationship. At June 30, ~~2022,~~2023, and December 31, ~~2021,~~2022, the total cumulative basis adjustments associated with these hedging relationships was a ~~$80~~$219 million liability and a $6$135 million liability, respectively, of which the portion related to discontinued hedging relationships was a ~~$101~~$133 million liability and a ~~$20~~$138 million liability, respectively. At June 30, ~~2022,~~2023, and December 31, ~~2021,~~2022, the notional amounts of the designated hedged items were ~~$2.7~~$10.5 billion and ~~$1.2~~$4.0 billion, respectively, with cumulative basis adjustments of a ~~$21~~$86 million ~~asset~~liability and a ~~$14~~$3 million asset, respectively, which would be allocated across the entire remaining closed pool upon termination or maturity of the hedge relationship. Refer to Note 76 for a reconciliation of the amortized cost and fair value of available-for-sale securities.

(c)These amounts include the ~~amortized cost basis~~carrying value of closed portfolios of loan receivables used to designate hedging relationships in which the hedged item is the ~~last layer expected~~stated amount of assets in the closed portfolios anticipated to be ~~remaining at~~outstanding for the ~~end of the hedging relationship.~~designated hedge period. At June 30, ~~2022,~~2023, and December 31, ~~2021,~~2022, the ~~amortized cost basis~~carrying value of the closed portfolios used in these hedging relationships was ~~$46.2~~$46.9 billion and ~~$44.1~~$46.4 billion, ~~respectively.~~respectively, of which $41.9 billion and $46.1 billion, respectively, represents the carrying value of closed portfolios designated in an active hedge relationship. At June 30, ~~2022,~~2023, and December 31, ~~2021,~~2022, the total cumulative basis adjustments associated with these hedging relationships was a ~~$501~~$432 million liability and a ~~$37~~$617 million liability, respectively, of which the portion related to discontinued hedging relationships was a ~~$83~~$38 million liability and a ~~$46~~$57 million ~~asset,~~liability, respectively. At June 30, ~~2022,~~2023, and December 31, ~~2021,~~2022, the notional amounts of the designated hedged items were ~~$20.3~~$26.8 billion and ~~$15.6~~$22.8 billion, respectively, with cumulative basis adjustments of a ~~$419~~$394 million liability and ~~an $82~~a $560 million liability, respectively, which would be allocated across the entire remaining closed pool upon termination or maturity of the hedge relationship.

Statement of 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)	2022		2021		2022		2021		($ in millions)	2023		2022		2023		2022
Gain (loss) recognized in earnings	Gain (loss) recognized in earnings									Gain (loss) recognized in earnings
Interest rate contracts	Interest rate contracts									Interest rate contracts
Gain (loss) on mortgage and automotive loans, net		$	3	$	(1)	$	1	$	(8)
Gain on mortgage and automotive loans, net										Gain on mortgage and automotive loans, net	$	4	$	3	$	9	$	1
Other income, net of losses	Other income, net of losses	3		2		6		2		Other income, net of losses	—		3		—		6
Total interest rate contracts	Total interest rate contracts	6		1		7		(6)		Total interest rate contracts	4		6		9		7
Foreign exchange contracts	Foreign exchange contracts									Foreign exchange contracts

Other operating expenses	Other operating expenses	5		(2)		2		(4)		Other operating expenses	(1)		5		—		2
Total foreign exchange contracts	Total foreign exchange contracts	5		(2)		2		(4)		Total foreign exchange contracts	(1)		5		—		2
Credit contracts	Credit contracts									Credit contracts

Other income, net of losses	Other income, net of losses	(1)		(7)		(2)		(15)		Other income, net of losses	—		(1)		(5)		(2)
Total credit contracts	Total credit contracts	(1)		(7)		(2)		(15)		Total credit contracts	—		(1)		(5)		(2)
Equity contracts										Equity contracts
Other income, net of losses										Other income, net of losses	(3)		—		(7)		—
Total equity contracts										Total equity contracts	(3)		—		(7)		—
Total gain (loss) recognized in earnings	Total gain (loss) recognized in earnings	$	10	$	(8)	$	7	$	(25)	Total gain (loss) recognized in earnings	$	—	$	10	$	(3)	$	7

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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 long-term debt
Three months ended June 30, ($ in millions)	Three months ended June 30, ($ in millions)	2022		2021			2022		2021			2022		2021			2022		2021			Three months ended June 30, ($ in millions)	2023		2022		2023		2022		2023		2022
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	$	—	$	—		$	—	$	—		$	—	$	—		$	6	$	(66)		Hedged fixed-rate unsecured debt	$	—	$	—	$	—	$	—	$	—	$	6
Derivatives designated as hedging instruments on fixed-rate unsecured debt	Derivatives designated as hedging instruments on fixed-rate unsecured debt	—		—			—		—			—		—			(6)		66			Derivatives designated as hedging instruments on fixed-rate unsecured debt	—		—		—		—		—		(6)

Hedged available-for-sale securities	Hedged available-for-sale securities	—		—			(47)		(4)			—		—			—		—			Hedged available-for-sale securities	—		—		(238)		(47)		—		—
Derivatives designated as hedging instruments on available-for-sale securities	Derivatives designated as hedging instruments on available-for-sale securities	—		—			47		4			—		—			—		—			Derivatives designated as hedging instruments on available-for-sale securities	—		—		238		47		—		—
Hedged fixed-rate consumer automotive loans	Hedged fixed-rate consumer automotive loans	(149)		(38)			—		—			—		—			—		—			Hedged fixed-rate consumer automotive loans	(39)		(149)		—		—		—		—
Derivatives designated as hedging instruments on fixed-rate consumer automotive loans	Derivatives designated as hedging instruments on fixed-rate consumer automotive loans	149		38			—		—			—		—			—		—			Derivatives designated as hedging instruments on fixed-rate consumer automotive loans	39		149		—		—		—		—
Total gain on fair value hedging relationships	Total gain on fair value hedging relationships	—		—			—		—			—		—			—		—			Total gain on fair value hedging relationships	—		—		—		—		—		—
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 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	5		18			—		—			—		—			—		—			Reclassified from accumulated other comprehensive income into income	5		5		—		—		—		—
Reclassified from accumulated other comprehensive income into income as a result of a forecasted transaction being probable not to occur		—		4			—		—			—		—			—		—

Total gain on cash flow hedging relationships	Total gain on cash flow hedging relationships	$	5	$	22		$	—	$	—		$	—	$	—		$	—	$	—		Total gain on cash flow hedging relationships	$	5	$	5	$	—	$	—	$	—	$	—
Total amounts presented in the Condensed Consolidated Statement of Comprehensive Income	Total amounts presented in the Condensed Consolidated Statement of Comprehensive Income	$	1,842	$	1,588		$	203	$	147		$	263	$	268		$	184	$	230		Total amounts presented in the Condensed Consolidated Statement of Comprehensive Income	$	2,721	$	1,842	$	247	$	203	$	252	$	184


	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)	2023		2022			2023		2022			2023		2022
Gain (loss) on fair value hedging relationships
Interest rate contracts
Hedged fixed-rate unsecured debt	$	—	$	—		$	—	$	—		$	1	$	4
Derivatives designated as hedging instruments on fixed-rate unsecured debt	—		—			—		—			(1)		(4)


Hedged available-for-sale securities	—		—			(108)		(89)			—		—
Derivatives designated as hedging instruments on available-for-sale securities	—		—			108		89			—		—
Hedged fixed-rate consumer automotive loans	166		(453)			—		—			—		—
Derivatives designated as hedging instruments on fixed-rate consumer automotive loans	(166)		453			—		—			—		—
Total gain on fair value hedging relationships	—		—			—		—			—		—
Gain on cash flow hedging relationships
Interest rate contracts




Hedged variable-rate commercial loans
Reclassified from accumulated other comprehensive income into income	10		11			—		—			—		—




Total gain on cash flow hedging relationships	$	10	$	11		$	—	$	—		$	—	$	—
Total amounts presented in the Condensed Consolidated Statement of Comprehensive Income	$	5,296	$	3,556		$	485	$	391		$	479	$	369

During the next 12 months, we estimate $1 million of gains will be reclassified into pretax earnings from derivatives designated as cash flow hedges.

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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
Six months ended June 30, ($ in millions)
2022 2021 2022 2021 2022 2021 2022 2021
Gain (loss) on fair value hedging relationships
Interest rate contracts
Hedged fixed-rate unsecured debt $ — $ — $ — $ — $ — $ — $ 4 $ 73
Derivatives designated as hedging instruments on fixed-rate unsecured debt — — — — — — (4) (73)
Hedged available-for-sale securities — — (89) (17) — — — —
Derivatives designated as hedging instruments on available-for-sale securities — — 89 17 — — — —
Hedged fixed-rate consumer automotive loans (453) (77) — — — — — —
Derivatives designated as hedging instruments on fixed-rate consumer automotive loans 453 77 — — — — — —
Total gain on fair value hedging relationships — — — — — — — —
(Loss) gain on cash flow hedging relationships
Interest rate contracts
Hedged deposit liabilities
Reclassified from accumulated other comprehensive income into income — — — — — (1) — —
Hedged variable-rate commercial loans
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 — 4 — — — — — —
Total gain (loss) on cash flow hedging relationships $ 11 $ 44 $ — $ — $ — $ (1) $ — $ —
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 $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)	2022		2021			2022		2021				2022		2021			Three months ended June 30, ($ in millions)	2023		2022		2023		2022		2023		2022
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	$	—	$	—		$	—	$	—			$	1	$	1		Amortization of deferred unsecured debt basis adjustments	$	—	$	—	$	—	$	—	$	2	$	1
Interest for qualifying accounting hedges of unsecured debt	Interest for qualifying accounting hedges of unsecured debt	—		—			—		—				1		2			Interest for qualifying accounting hedges of unsecured debt	—		—		—		—		—		1
Amortization of deferred secured debt basis adjustments (FHLB advances)	Amortization of deferred secured debt basis adjustments (FHLB advances)	—		—			—		—				(1)		(3)			Amortization of deferred secured debt basis adjustments (FHLB advances)	—		—		—		—		—		(1)

Amortization of deferred basis adjustments of available-for-sale securities	Amortization of deferred basis adjustments of available-for-sale securities	—		—			4		(1)				—		—			Amortization of deferred basis adjustments of available-for-sale securities	—		—		6		4		—		—
Interest for qualifying accounting hedges of available-for-sale securities	Interest for qualifying accounting hedges of available-for-sale securities	—		—			—		(3)				—		—			Interest for qualifying accounting hedges of available-for-sale securities	—		—		27		—		—		—
Amortization of deferred loan basis adjustments	Amortization of deferred loan basis adjustments	(2)		(11)			—		—				—		—			Amortization of deferred loan basis adjustments	8		(2)		—		—		—		—
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)			—		—				—		—			Interest for qualifying accounting hedges of consumer automotive loans held for investment	189		(5)		—		—		—		—
Total (loss) gain on fair value hedging relationships		$	(7)	$	(43)		$	4	$	(4)			$	1	$	—
Total gain (loss) on fair value hedging relationships																		Total gain (loss) on fair value hedging relationships	$	197	$	(7)	$	33	$	4	$	2	$	1


	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)	2023		2022			2023		2022			2023		2022
Gain (loss) on fair value hedging relationships
Interest rate contracts
Amortization of deferred unsecured debt basis adjustments	$	—	$	—		$	—	$	—		$	4	$	2
Interest for qualifying accounting hedges of unsecured debt	—		—			—		—			—		1
Amortization of deferred secured debt basis adjustments (FHLB advances)	—		—			—		—			1		(2)

Amortization of deferred basis adjustments of available-for-sale securities	—		—			11		5			—		—
Interest for qualifying accounting hedges of available-for-sale securities	—		—			40		(1)			—		—
Amortization of deferred loan basis adjustments	18		(11)			—		—			—		—
Interest for qualifying accounting hedges of consumer automotive loans held for investment	351		(23)			—		—			—		—
Total gain (loss) on fair value hedging relationships	$	369	$	(34)		$	51	$	4		$	5	$	1

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


	Three months ended June 30,				Six months ended June 30,
($ in millions)	2023		2022		2023		2022
Interest rate contracts
Loss recognized in other comprehensive (loss) income	$	(27)	$	(5)	$	(28)	$	(11)

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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
Six months ended June 30, ($ in millions)
2022 2021 2022 2021 2022 2021
Gain (loss) on fair value hedging relationships
Interest rate contracts
Amortization of deferred unsecured debt basis adjustments $ — $ — $ — $ — $ 2 $ 2
Interest for qualifying accounting hedges of unsecured debt — — — — 1 3
Amortization of deferred secured debt basis adjustments (FHLB advances) — — — — (2) (8)
Amortization of deferred basis adjustments of available-for-sale securities — — 5 (3) — —
Interest for qualifying accounting hedges of available-for-sale securities — — (1) (4) — —
Amortization of deferred loan basis adjustments (11) (24) — — — —
Interest for qualifying accounting hedges of consumer automotive loans held for investment (23) (62) — — — —
Total (loss) gain on fair value hedging relationships $ (34) $ (86) $ 4 $ (7) $ 1 $ (3)

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

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

The following table summarizes the effect of net investment hedges on accumulated other comprehensive ~~loss and the Condensed Consolidated Statement of 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)	2022		2021		2022		2021		($ in millions)	2023		2022		2023		2022
Foreign exchange contracts (a) (b)	Foreign exchange contracts (a) (b)									Foreign exchange contracts (a) (b)
Gain (loss) recognized in other comprehensive loss		$	4	$	(3)	$	1	$	(5)
(Loss) gain recognized in other comprehensive (loss) income										(Loss) gain recognized in other comprehensive (loss) income	$	(3)	$	4	$	(3)	$	1

(a)There were no amounts excluded from effectiveness testing for the three months and six months ended June 30, ~~2022,~~2023, or ~~2021.~~2022.

(b)Gains and losses reclassified from accumulated other comprehensive loss are reported as other income, net of losses, in the Condensed Consolidated Statement of Comprehensive Income. There were no amounts reclassified for the three months and six months ended June 30, ~~2022,~~2023, or ~~2021.~~2022.

~~20.~~19. Income Taxes

We recognized total income tax expense from continuing operations of ~~$152~~$74 million and ~~$343~~$142 million for the three months and six months ended June 30, ~~2022,~~2023, respectively, compared to income tax expense of ~~$143~~$152 million and ~~$354~~$343 million for the same periods in ~~2021.~~2022. The ~~increase~~decreases in income tax expense for the three months ended June 30, 2022, compared to the same period in 2021, was primarily due to adjustments to the valuation allowance on foreign tax credit carryforwards, partially offset by the tax effects of a decrease in pretax earnings. The decrease in income tax expense for theand six months ended June 30, ~~2022,~~2023, compared to the same ~~period~~periods in ~~2021, was~~2022, were primarily due to the tax effects of a decrease in pretax earnings ~~partially offset by adjustments to the valuation allowance on foreign~~and an increase in qualified clean vehicle tax ~~credit carryforwards.~~credits for purchased plug-in electric vehicles or fuel cell vehicles.

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. 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.

~~21.~~20. 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.

~~Table of Contents~~

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

~~Ally Financial Inc. • Form 10-Q~~

U.S. 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

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Notes to Condensed Consolidated Financial Statements (unaudited)

Ally Financial Inc. • Form 10-Q

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.

•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.

We also enter into interest rate lock commitments and forward 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. 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, 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.~~derivative assets and liabilities. 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 in the valuation of derivative liabilities through a DVA and the credit risk of our counterparties in the valuation of derivative ~~instruments~~assets through a CVA, if warranted. ~~The CVA calculation would utilize the~~When measuring these valuation adjustments, we generally use credit default swap ~~spreads of the counterparty.~~spreads.

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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.~~derivatives. 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, 2022 ($ in millions)		Level 1		Level 2		Level 3		Total
June 30, 2023 ($ in millions)										June 30, 2023 ($ in millions)	Level 1		Level 2		Level 3		Total
Assets	Assets									Assets
Investment securities	Investment securities									Investment securities
Equity securities (a)		$	733	$	—	$	2	$	735
Equity securities (a) (b)										Equity securities (a) (b)	$	715	$	—	$	1	$	716
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	2,374		—		—		2,374		U.S. Treasury and federal agencies	2,029		—		—		2,029
U.S. States and political subdivisions	U.S. States and political subdivisions	—		776		12		788		U.S. States and political subdivisions	—		660		5		665
Foreign government	Foreign government	38		111		—		149		Foreign government	46		122		—		168
Agency mortgage-backed residential	Agency mortgage-backed residential	—		17,859		—		17,859		Agency mortgage-backed residential	—		15,856		—		15,856
Mortgage-backed residential	Mortgage-backed residential	—		4,654		—		4,654		Mortgage-backed residential	—		4,143		—		4,143
Agency mortgage-backed commercial	Agency mortgage-backed commercial	—		3,730		—		3,730		Agency mortgage-backed commercial	—		3,684		—		3,684

Asset-backed	Asset-backed	—		475		—		475		Asset-backed	—		383		—		383
Corporate debt	Corporate debt	—		1,714		—		1,714		Corporate debt	—		1,736		—		1,736
Total available-for-sale securities	Total available-for-sale securities	2,412		29,319		12		31,743		Total available-for-sale securities	2,075		26,584		5		28,664
Mortgage loans held-for-sale ~~(b)~~(c)	Mortgage loans held-for-sale ~~(b)~~(c)	—		81		—		81		Mortgage loans held-for-sale ~~(b)~~(c)	—		36		—		36

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

Other assets	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	—		1		2		3		Interest rate	—		33		1		34

Equity contracts		1		—		—		1
Equity										Equity	1		—		—		1
Total derivative contracts in a receivable position	Total derivative contracts in a receivable position	1		1		2		4		Total derivative contracts in a receivable position	1		33		1		35

Total assets	Total assets	$	3,146	$	29,401	$	23	$	32,570	Total assets	$	2,791	$	26,653	$	7	$	29,451
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		$	—	$	—	$	4	$	4
Foreign currency		—		3		—		3
Credit contracts		—		—		48		48

Credit										Credit	$	—	$	—	$	19	$	19
Equity										Equity	3		—		—		3
Total derivative contracts in a payable position	Total derivative contracts in a payable position	—		3		52		55		Total derivative contracts in a payable position	3		—		19		22

Total liabilities	Total liabilities	$	—	$	3	$	52	$	55	Total liabilities	$	3	$	—	$	19	$	22

(a)Our direct investment in any one industry did not exceed ~~14%~~17%.

(b)Excludes $43 million of equity securities that are measured at fair value using the net asset value practical expedient and therefore are not classified in the fair value hierarchy.

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

5661

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Notes to Condensed Consolidated Financial Statements (unaudited)

Ally Financial Inc. • Form 10-Q


		Recurring fair value measurements									Recurring fair value measurements
December 31, 2021 ($ in millions)		Level 1		Level 2		Level 3		Total
December 31, 2022 ($ in millions)										December 31, 2022 ($ in millions)	Level 1		Level 2		Level 3		Total
Assets	Assets									Assets
Investment securities	Investment securities									Investment securities
Equity securities (a)		$	1,093	$	—	$	9	$	1,102
Equity securities (a) (b)										Equity securities (a) (b)	$	642	$	—	$	1	$	643
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	2,155		—		—		2,155		U.S. Treasury and federal agencies	2,016		—		—		2,016
U.S. States and political subdivisions	U.S. States and political subdivisions	—		855		9		864		U.S. States and political subdivisions	—		756		4		760
Foreign government	Foreign government	19		138		—		157		Foreign government	39		107		—		146
Agency mortgage-backed residential	Agency mortgage-backed residential	—		19,039		—		19,039		Agency mortgage-backed residential	—		16,633		—		16,633
Mortgage-backed residential	Mortgage-backed residential	—		4,425		—		4,425		Mortgage-backed residential	—		4,299		—		4,299
Agency mortgage-backed commercial	Agency mortgage-backed commercial	—		4,526		—		4,526		Agency mortgage-backed commercial	—		3,535		—		3,535

Asset-backed	Asset-backed	—		534		—		534		Asset-backed	—		433		—		433
Corporate debt	Corporate debt	—		1,887		—		1,887		Corporate debt	—		1,719		—		1,719
Total available-for-sale securities	Total available-for-sale securities	2,174		31,404		9		33,587		Total available-for-sale securities	2,055		27,482		4		29,541
Mortgage loans held-for-sale ~~(b)~~(c)	Mortgage loans held-for-sale ~~(b)~~(c)	—		80		—		80		Mortgage loans held-for-sale ~~(b)~~(c)	—		13		—		13

Finance receivables and loans, net	Finance receivables and loans, net									Finance receivables and loans, net
Consumer other ~~(b)~~(c)	Consumer other ~~(b)~~(c)	—		—		7		7		Consumer other ~~(b)~~(c)	—		—		3		3

Other assets	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	—		1		5		6		Interest rate	—		22		—		22

Equity contracts		1		—		—		1
Equity										Equity	1		—		—		1
Total derivative contracts in a receivable position	Total derivative contracts in a receivable position	1		1		5		7		Total derivative contracts in a receivable position	1		22		—		23

Total assets	Total assets	$	3,268	$	31,485	$	30	$	34,783	Total assets	$	2,698	$	27,517	$	8	$	30,223
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		$	—	$	—	$	2	$	2

Foreign currency	Foreign currency	—		3		—		3		Foreign currency	$	—	$	2	$	—	$	2
Credit contracts		—		—		56		56
Equity contracts		1		—		—		1
Credit										Credit	—		—		39		39
Equity										Equity	1		—		—		1
Total derivative contracts in a payable position	Total derivative contracts in a payable position	1		3		58		62		Total derivative contracts in a payable position	1		2		39		42

Total liabilities	Total liabilities	$	1	$	3	$	58	$	62	Total liabilities	$	1	$	2	$	39	$	42

(a)Our direct investment in any one industry did not exceed 8%15%.

(b)Excludes $38 million of equity securities that are measured at fair value using the net asset value practical expedient and therefore are not classified in the fair value hierarchy.

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

5762

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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)				Equity securities (a)						Available-for-sale securities					Finance receivables and loans, net (b)
($ in millions)	($ in millions)	2022		2021		2022		2021		2022		2021		2022		2021			($ in millions)	2023		2022			2023		2022			2023		2022
Assets	Assets																		Assets
Fair value at April 1,	Fair value at April 1,	$	1	$	11	$	11	$	7	$	—	$	146	$	7	$	8		Fair value at April 1,	$	1	$	1		$	4	$	11		$	2	$	7
Net realized/unrealized gains	Net realized/unrealized gains																		Net realized/unrealized gains
Included in earnings	Included in earnings	1		—		—		—		—		21		—		—			Included in earnings	—		1			—		—			—		—
Included in OCI	Included in OCI	—		—		—		—		—		—		—		—			Included in OCI	—		—			—		—			—		—
Purchases	Purchases	—		—		1		—		—		812		4		5			Purchases	—		—			1		1			—		4
Sales	Sales	—		(2)		—		—		—		(882)		—		—			Sales	—		—			—		—			—		—
Issuances	Issuances	—		—		—		—		—		—		—		—			Issuances	—		—			—		—			—		—
Settlements	Settlements	—		—		—		—		—		—		(4)		(5)			Settlements	—		—			—		—			(2)		(4)
Transfers into Level 3	Transfers into Level 3	—		—		—		—		—		—		—		—			Transfers into Level 3	—		—			—		—			—		—
Transfers out of Level 3	Transfers out of Level 3	—		—		—		—		—		—		—		—			Transfers out of Level 3	—		—			—		—			—		—
Fair value at June 30		$	2	$	9	$	12	$	7	$	—	$	97	$	7	$	8
Fair value at June 30,																			Fair value at June 30,	$	1	$	2		$	5	$	12		$	—	$	7
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	$	—	$	—	$	—	$	—	$	—	$	1	$	—	$	—		Included in earnings	$	—	$	—		$	—	$	—		$	—	$	—
Included in OCI	Included in OCI	—		—		—		—		—		—		—		—			Included in OCI	—		—			—		—			—		—

(a)Net realized/unrealized gains are reported as other gain (loss) 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)					Derivative liabilities, net of derivative assets (a)
($ in millions)	($ in millions)	2022		2021		($ in millions)	2023		2022
Liabilities	Liabilities					Liabilities
Fair value at April 1,	Fair value at April 1,	$	61	$	28	Fair value at April 1,	$	42	$	61
Net realized/unrealized (gains) losses	Net realized/unrealized (gains) losses					Net realized/unrealized (gains) losses
Included in earnings	Included in earnings	(1)		7		Included in earnings	(3)		(1)
Included in OCI	Included in OCI	—		—		Included in OCI	—		—
Purchases	Purchases	—		—		Purchases	—		—
Sales	Sales	—		—		Sales	—		—
Issuances	Issuances	—		2		Issuances	—		—
Settlements	Settlements	(10)		—		Settlements	(25)		(10)
Transfers into Level 3	Transfers into Level 3	—		—		Transfers into Level 3	—		—
Transfers out of Level 3(b)	Transfers out of Level 3(b)	—		—		Transfers out of Level 3(b)	4		—
Fair value at June 30,	Fair value at June 30,	$	50	$	37	Fair value at June 30,	$	18	$	50
Net unrealized (gains) losses 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	$	(1)	$	10	Included in earnings	$	(1)	$	(1)
Included in OCI	Included in OCI	—		—		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.

(b)Represents the settlement value of interest rate derivative assets that are transferred to loans held-for-sale within Level 2 of the fair value hierarchy during the three months ended June 30, 2023. This transfer is deemed to have occurred at the end of the reporting period.

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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)				Equity securities (a)						Available-for-sale securities					Finance receivables and loans, net (b) (c)
($ in millions)	($ in millions)	2022		2021		2022		2021		2022		2021		2022		2021			($ in millions)	2023		2022			2023		2022			2023		2022
Assets	Assets																		Assets
Fair value at January 1,	Fair value at January 1,	$	9	$	7	$	9	$	7	$	—	$	91	$	7	$	8		Fair value at January 1,	$	1	$	9		$	4	$	9		$	3	$	7
Net realized/unrealized gains (losses)	Net realized/unrealized gains (losses)																		Net realized/unrealized gains (losses)
Included in earnings	Included in earnings	2		4		—		—		—		49		(1)		1			Included in earnings	—		2			—		—			—		(1)
Included in OCI	Included in OCI	—		—		—		—		—		—		—		—			Included in OCI	—		—			—		—			—		—
Purchases	Purchases	—		—		3		—		—		1,851		8		8			Purchases	—		—			1		3			—		8
Sales	Sales	(9)		(2)		—		—		—		(1,894)		—		—			Sales	—		(9)			—		—			—		—
Issuances	Issuances	—		—		—		—		—		—		—		—			Issuances	—		—			—		—			—		—
Settlements	Settlements	—		—		—		—		—		—		(7)		(9)			Settlements	—		—			—		—			(3)		(7)
Transfers into Level 3	Transfers into Level 3	—		—		—		—		—		—		—		—			Transfers into Level 3	—		—			—		—			—		—
Transfers out of 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		Fair value at June 30,	$	1	$	2		$	5	$	12		$	—	$	7
Net unrealized gains (losses) still held at June 30,
Net unrealized losses still held at June 30,																			Net unrealized losses still held at June 30,
Included in earnings	Included in earnings	$	—	$	4	$	—	$	—	$	—	$	1	$	(1)	$	—		Included in earnings	$	—	$	—		$	—	$	—		$	—	$	(1)
Included in OCI	Included in OCI	—		—		—		—		—		—		—		—			Included in OCI	—		—			—		—			—		—

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


		Derivative liabilities, net of derivative assets (a)					Derivative liabilities, net of derivative assets (a)
($ in millions)	($ in millions)	2022		2021		($ in millions)	2023		2022
Liabilities	Liabilities					Liabilities
Fair value at January 1,	Fair value at January 1,	$	53	$	12	Fair value at January 1,	$	39	$	53
Net realized/unrealized losses
Net realized/unrealized (gains) losses						Net realized/unrealized (gains) losses
Included in earnings	Included in earnings	7		22		Included in earnings	(3)		7
Included in OCI	Included in OCI	—		—		Included in OCI	—		—
Purchases	Purchases	—		—		Purchases	—		—
Sales	Sales	—		—		Sales	—		—
Issuances	Issuances	—		3		Issuances	—		—
Settlements	Settlements	(10)		—		Settlements	(25)		(10)
Transfers into Level 3	Transfers into Level 3	—		—		Transfers into Level 3	—		—
Transfers out of Level 3(b)	Transfers out of Level 3(b)	—		—		Transfers out of Level 3(b)	7		—
Fair value at June 30,	Fair value at June 30,	$	50	$	37	Fair value at June 30,	$	18	$	50
Net unrealized (gains) losses 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	$	(4)	$	25	Included in earnings	$	(1)	$	(4)
Included in OCI	Included in OCI	—		—		Included in OCI	—		—

(a)Net realized/unrealized (gains) 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)Represents the settlement value of interest rate derivative assets that are transferred to loans held-for-sale within Level 2 of the fair value hierarchy during the six months ended June 30, 2023. This transfer is deemed to have occurred at the end of the reporting period.

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, ~~2022,~~2023, and December 31, ~~2021,~~2022, 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, 2022 ($ in millions)		Level 1		Level 2		Level 3		Total
June 30, 2023 ($ in millions)														June 30, 2023 ($ 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	$	—	$	—	$	717	$	717	$	—	n/m	(a)	Loans held-for-sale, net	$	—	$	—	$	261	$	261	$	—	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	—		—		5		5		—		n/m	(a)	Automotive	—		—		20		20		(5)		n/m	(a)
Other	Other	—		—		60		60		(77)		n/m	(a)	Other	—		—		101		101		(60)		n/m	(a)
Total commercial finance receivables and loans, net	Total commercial finance receivables and loans, net	—		—		65		65		(77)		n/m	(a)	Total commercial finance receivables and loans, net	—		—		121		121		(65)		n/m	(a)
Other assets	Other assets													Other assets
Nonmarketable equity investments	Nonmarketable equity investments	—		—		12		12		—		n/m	(a)	Nonmarketable equity investments	—		6		—		6		—		n/m	(a)

Repossessed and foreclosed assets (c)	Repossessed and foreclosed assets (c)	—		—		5		5		—		n/m	(a)	Repossessed and foreclosed assets (c)	—		—		11		11		(1)		n/m	(a)

Total assets	Total assets	$	—	$	—	$	799	$	799	$	(77)	n/m		Total assets	$	—	$	6	$	393	$	399	$	(66)	n/m

n/m = not meaningful

(a)We consider the applicable valuation allowance, allowance for loan losses, or cumulative ~~impairment~~adjustments 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)The allowance provided for repossessed and foreclosed assets represents any cumulative valuation adjustment recognized to adjust the assets to fair value.


		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, 2021 ($ in millions)		Level 1		Level 2		Level 3		Total
December 31, 2022 ($ in millions)														December 31, 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	$	—	$	—	$	468	$	468	$	—	n/m	(a)	Loans held-for-sale, net	$	—	$	—	$	641	$	641	$	—	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	—		—		4		4		—		n/m	(a)	Automotive	—		—		3		3		—		n/m	(a)
Other	Other	—		—		112		112		(65)		n/m	(a)	Other	—		—		39		39		(89)		n/m	(a)
Total commercial finance receivables and loans, net	Total commercial finance receivables and loans, net	—		—		116		116		(65)		n/m	(a)	Total commercial finance receivables and loans, net	—		—		42		42		(89)		n/m	(a)
Other assets	Other assets													Other assets
Nonmarketable equity investments	Nonmarketable equity investments	—		—		7		7		(5)		n/m	(a)	Nonmarketable equity investments	—		—		12		12		3		n/m	(a)

Repossessed and foreclosed assets (c)	Repossessed and foreclosed assets (c)	—		—		4		4		—		n/m	(a)	Repossessed and foreclosed assets (c)	—		—		5		5		—		n/m	(a)

Total assets	Total assets	$	—	$	—	$	595	$	595	$	(70)	n/m		Total assets	$	—	$	—	$	700	$	700	$	(86)	n/m

n/m = not meaningful

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

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Notes to Condensed Consolidated Financial Statements (unaudited)

Ally Financial Inc. • Form 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 and certain ~~acquired~~ personal lending finance receivables. We elected the fair value option for conforming mortgage loans 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~~ 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.

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, ~~2022,~~2023, and December 31, ~~2021.~~2022.


				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, 2022
June 30, 2023												June 30, 2023
Financial assets	Financial assets											Financial assets
Held-to-maturity securities	Held-to-maturity securities	$	1,112	$	—	$	998	$	—	$	998	Held-to-maturity securities	$	1,030	$	—	$	850	$	—	$	850
Loans held-for-sale, net	Loans held-for-sale, net	717		—		—		717		717		Loans held-for-sale, net	261		—		—		261		261
Finance receivables and loans, net	Finance receivables and loans, net	125,000		—		—		128,544		128,544		Finance receivables and loans, net	134,668		—		—		135,779		135,779
FHLB/FRB stock (a)	FHLB/FRB stock (a)	997		—		997		—		997		FHLB/FRB stock (a)	754		—		754		—		754
Financial liabilities	Financial liabilities											Financial liabilities
Deposit liabilities	Deposit liabilities	$	38,629	$	—	$	—	$	38,312	$	38,312	Deposit liabilities	$	55,309	$	—	$	—	$	55,053	$	55,053
Short-term borrowings	Short-term borrowings	7,775		—		—		7,779		7,779		Short-term borrowings	2,194		—		—		2,234		2,234
Long-term debt	Long-term debt	16,984		—		11,447		6,379		17,826		Long-term debt	20,141		—		13,850		6,679		20,529
December 31, 2021
December 31, 2022												December 31, 2022
Financial assets	Financial assets											Financial assets
Held-to-maturity securities	Held-to-maturity securities	$	1,170	$	—	$	1,204	$	—	$	1,204	Held-to-maturity securities	$	1,062	$	—	$	884	$	—	$	884
Loans held-for-sale, net	Loans held-for-sale, net	469		—		—		469		469		Loans held-for-sale, net	641		—		—		641		641
Finance receivables and loans, net	Finance receivables and loans, net	118,994		—		—		126,044		126,044		Finance receivables and loans, net	132,034		—		—		133,856		133,856
FHLB/FRB stock (a)	FHLB/FRB stock (a)	738		—		738		—		738		FHLB/FRB stock (a)	719		—		719		—		719
Financial liabilities	Financial liabilities											Financial liabilities
Deposit liabilities	Deposit liabilities	$	40,953	$	—	$	—	$	41,164	$	41,164	Deposit liabilities	$	42,336	$	—	$	—	$	41,909	$	41,909

Short-term borrowings												Short-term borrowings	2,399		—		—		2,417		2,417
Long-term debt	Long-term debt	17,029		—		12,637		6,892		19,529		Long-term debt	17,762		—		12,989		5,263		18,252

(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.

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

Our derivative contracts and repurchase/reverse repurchase transactions are generally 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.

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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.

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, ~~2022,~~2023, 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 ~~19.~~18.

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
($ in millions) Financial instruments Collateral (a) (b) (c) Net amount
June 30, 2022
Assets
Derivative assets in net asset positions $ 1 $ — $ 1 $ — $ — $ 1
Derivative assets with no offsetting arrangements 3 — 3 — — 3
Total assets $ 4 $ — $ 4 $ — $ — $ 4
Liabilities
Derivative liabilities in net liability positions $ 3 $ — $ 3 $ — $ (3) $ —
Derivative liabilities with no offsetting arrangements 52 — 52 — — 52
Total liabilities $ 55 $ — $ 55 $ — $ (3) $ 52
December 31, 2021
Assets
Derivative assets in net asset positions $ 1 $ — $ 1 $ (1) $ — $ —
Derivative assets with no offsetting arrangements 6 — 6 — — 6
Total assets $ 7 $ — $ 7 $ (1) $ — $ 6
Liabilities
Derivative liabilities in net liability positions $ 3 $ — $ 3 $ — $ (2) $ 1
Derivative liabilities in net asset positions 1 — 1 (1) — —
Derivative liabilities with no offsetting arrangements 58 — 58 — — 58
Total liabilities $ 62 $ — $ 62 $ (1) $ (2) $ 59


	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)							Financial instruments		Collateral (a) (b) (c)		Net amount

June 30, 2023
Assets
Derivative assets (d)	35		—		35		(1)		(29)		5

Total assets	$	35	$	—	$	35	$	(1)	$	(29)	$	5
Liabilities
Derivative liabilities (e)	22		—		22		(1)		(2)		19
Securities sold under agreements to repurchase (f)	994		—		994		—		(994)		—
Total liabilities	$	1,016	$	—	$	1,016	$	(1)	$	(996)	$	19
December 31, 2022

Assets
Derivative assets	$	23	$	—	$	23	$	(1)	$	(22)	$	—

Total assets	$	23	$	—	$	23	$	(1)	$	(22)	$	—
Liabilities
Derivative liabilities (e)	$	42	$	—	$	42	$	(1)	$	(1)	$	40
Securities sold under agreements to repurchase (f)	499		—		499		—		(499)		—
Total liabilities	$	541	$	—	$	541	$	(1)	$	(500)	$	40

(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~~noncash 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.

(d)Includes derivative assets with no offsetting arrangements of $2 million as of June 30, 2023.

(e)Includes derivative liabilities with no offsetting arrangements of $19 million and $39 million as of June 30, 2023, and December 31, 2022, respectively.

(f)For additional information on securities sold under agreements to repurchase, refer to Note 12.

~~Table of Contents~~

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

~~Ally Financial Inc. • Form 10-Q~~

~~23.~~22. 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 4four operating segments: Automotive Finance operations, Insurance operations, Mortgage Finance operations, and Corporate Finance operations, with the remaining activity reported in Corporate and Other. The

Table of Contents

Notes to Condensed Consolidated Financial Statements (unaudited)

Ally Financial Inc. • Form 10-Q

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~~the following two 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.

•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.~~third party. 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~~Our Corporate Finance operations provide senior secured leveraged asset-based and 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, currently focused on lending to ~~serve companies in the healthcare industry.~~skilled nursing facilities, senior housing, and medical office buildings.

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 equity investments through Ally Ventures, our strategic ~~investments—~~investment business—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 a match funded basis, aligned with the expected duration and the benchmark rate curve plus an assumed credit spread. ~~Matching duration~~Match funding 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 corporate level. The net residual impact of the FTP methodology is included within the results of Corporate and Other.

The information presented in our reportable operating segments is based in part on internal allocations and methodologies, including a COH methodology, which ~~involve~~involves management judgment. COH methodology is used for measuring the profit and loss of our reportable operating segments. We have various enterprise functions, such as technology, marketing, finance, compliance, internal audit, and risk. Operating expenses from the enterprise functions are either directly allocated to the reportable operating segment, indirectly allocated to the reportable operating segment utilizing the COH methodology, or remain in Corporate and Other. COH methodology considers the reportable operating segment expense base and enterprise function expenses. The reportable operating segment expense base is used to determine the allocation mix. This mix is applied to the allocable expenses in Corporate and Other to determine the COH for the respective reportable operating segment. Allocable enterprise function costs are primarily technology and marketing expenses. Generally, costs that remain within Corporate and Other that are not allocated to our reportable operating segments include marketing sponsorships, treasury and other corporate activities, and charitable contributions.

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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)
2022
2023														2023
Net financing revenue and other interest income	Net financing revenue and other interest income	$	1,301	$	20	$	56	$	77	$	310	$	1,764	Net financing revenue and other interest income	$	1,349	$	29	$	53	$	92	$	50	$	1,573
Other revenue	Other revenue	72		158		4		19		59		312		Other revenue	83		337		5		28		53		506
Total net revenue	Total net revenue	1,373		178		60		96		369		2,076		Total net revenue	1,432		366		58		120		103		2,079
Provision for credit losses	Provision for credit losses	228		—		—		8		68		304		Provision for credit losses	331		—		—		15		81		427
Total noninterest expense	Total noninterest expense	545		300		54		28		211		1,138		Total noninterest expense	600		358		37		33		221		1,249
Income (loss) from continuing operations before income tax expense	Income (loss) from continuing operations before income tax expense	$	600	$	(122)	$	6	$	60	$	90	$	634	Income (loss) from continuing operations before income tax expense	$	501	$	8	$	21	$	72	$	(199)	$	403
Total assets	Total assets	$	107,178	$	8,819	$	19,126	$	8,890	$	41,690	$	185,703	Total assets	$	113,757	$	8,890	$	18,997	$	10,190	$	45,407	$	197,241
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)		—		—		(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	$	—	$	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

(a)Net financing revenue and other interest income after the provision for credit losses totaled ~~$1.5~~$1.1 billion and ~~$1.6~~$1.5 billion for the three months ended June 30, ~~2022,~~2023, and ~~June 30, 2021,~~2022, 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)
2022
2023														2023
Net financing revenue and other interest income	Net financing revenue and other interest income	$	2,596	$	37	$	109	$	160	$	555	$	3,457	Net financing revenue and other interest income	$	2,671	$	55	$	107	$	195	$	147	$	3,175
Other revenue	Other revenue	140		428		18		43		125		754		Other revenue	160		718		9		57		60		1,004
Total net revenue	Total net revenue	2,736		465		127		203		680		4,211		Total net revenue	2,831		773		116		252		207		4,179
Provision for credit losses	Provision for credit losses	332		—		—		14		125		471		Provision for credit losses	682		—		(1)		30		162		873
Total noninterest expense	Total noninterest expense	1,079		574		110		65		432		2,260		Total noninterest expense	1,206		673		75		78		483		2,515
Income (loss) from continuing operations before income tax expense	Income (loss) from continuing operations before income tax expense	$	1,325	$	(109)	$	17	$	124	$	123	$	1,480	Income (loss) from continuing operations before income tax expense	$	943	$	100	$	42	$	144	$	(438)	$	791
Total assets	Total assets	$	107,178	$	8,819	$	19,126	$	8,890	$	41,690	$	185,703	Total assets	$	113,757	$	8,890	$	18,997	$	10,190	$	45,407	$	197,241
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)		—		(4)		—		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

(a)Net financing revenue and other interest income after the provision for credit losses totaled $2.3 billion and $3.0 billion for ~~both~~ the six months ended June 30, 2023, and 2022, ~~and June 30, 2021.~~respectively.

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~~24.~~23. 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 ~~2021~~2022 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.

~~25.~~24. Subsequent Events

Declaration of Common Dividend

On July ~~14, 2022,~~17, 2023, our Board declared a quarterly cash dividend of $0.30 per share on all common stock. The dividend is payable on August 15, ~~2022,~~2023, to stockholders of record at the close of business on August 1, ~~2022.~~2023.

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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 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;

•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 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 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 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;

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•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;

•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 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 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 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 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, and the effects of climate change or the transition to a lower-carbon economy on our business, operations, and 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

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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.

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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, and certain strategic 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)	2022		2021		Favorable/(unfavorable) % change	2022		2021		Favorable/(unfavorable) % change	($ in millions)	2023		2022		Favorable/(unfavorable) % change	2023		2022		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	$	1,373	$	1,394	(2)	$	2,736	$	2,662	3	Automotive Finance	$	1,432	$	1,373	4	$	2,831	$	2,736	3
Insurance	Insurance	178		359		(50)	465		753		(38)	Insurance	366		178		106	773		465		66
Mortgage Finance	Mortgage Finance	60		45		33	127		108		18	Mortgage Finance	58		60		(3)	116		127		(9)
Corporate Finance	Corporate Finance	96		110		(13)	203		207		(2)	Corporate Finance	120		96		25	252		203		24
Corporate and Other	Corporate and Other	369		177		108	680		292		133	Corporate and Other	103		369		(72)	207		680		(70)
Total	Total	$	2,076	$	2,085	—	$	4,211	$	4,022	5	Total	$	2,079	$	2,076	—	$	4,179	$	4,211	(1)
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	$	600	$	917	(35)	$	1,325	$	1,720	(23)	Automotive Finance	$	501	$	600	(17)	$	943	$	1,325	(29)
Insurance	Insurance	(122)		87		n/m	(109)		228		(148)	Insurance	8		(122)		107	100		(109)		192
Mortgage Finance	Mortgage Finance	6		—		n/m	17		23		(26)	Mortgage Finance	21		6		n/m	42		17		147
Corporate Finance	Corporate Finance	60		95		(37)	124		148		(16)	Corporate Finance	72		60		20	144		124		16
Corporate and Other	Corporate and Other	90		(57)		n/m	123		(70)		n/m	Corporate and Other	(199)		90		n/m	(438)		123		n/m
Total	Total	$	634	$	1,042	(39)	$	1,480	$	2,049	(28)	Total	$	403	$	634	(36)	$	791	$	1,480	(47)

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~~automotive-finance provider is driven by the consistent and broad range of products and services we offer to ~~dealers.~~dealers and automotive retailers. 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~~e-commerce platforms. We also operate ~~Clearlane, our~~an 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

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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,

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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 provided and continue to provide automobile financing for battery-electric and plug-in hybrid vehicles, including brands such as Jeep, Tesla, Ford, and ~~battery-electric vehicles today, and are well positioned~~BMW. This positions us to remain a leader in automotive financing as we believe the majority of these vehicles will be sold through dealerships and automotive retailers with whom we have an established relationship. During the six months ended June 30, 2023, $347 million of our consumer automotive retail loan and operating lease originations and purchases were for battery-electric and plug-in hybrid vehicles. As of June 30, 2023, $859 million of our consumer automotive finance receivables and loans had battery-electric or plug-in hybrid vehicles as the underlying collateral, and $662 million of our investment in operating leases were battery-electric or plug-in hybrid vehicles.

~~The Growth channel was established to focus~~We have focused 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~~automotive 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~~Our 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 (includingincludes brands such as Ford, Toyota, Hyundai, Kia, Nissan, ~~Kia, Hyundai, Toyota,~~and Honda, as well as used-vehicle-only retailers with a national presence and ~~others), or used vehicle only retailers~~online-only automotive retailers. As of June 30, 2023, approximately 73% of our Growth channel dealer relationships were with franchised dealers and dealers 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 preferred VSC and other protection plan provider for GM Canada and VSC provider for Subaru Canada. In 2022, we entered into a long-term commitment to continue as the preferred VSC and other protection plan provider for GM 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. 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 with a portion of the insurance risk assumed through a quota share agreement. On a smaller scale, we also periodically assume other insurance risks through quota share arrangements and perform services as an underwriting carrier for an insurance program managed by a third-party where we cede the majority of such business to external reinsurance markets.

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 and insurance company ready to support and strengthen our approximately 22,200 active dealer relationships as of June 30, 2023. A dealer is considered to have an active relationship with us if we provided automotive financing, remarketing, or insurance services during the three months ended June 30, 2023.

•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, we offer a variety of competitively priced jumbo and conforming fixed- and adjustable-rate mortgage products through a ~~third-party fulfillment provider.~~third party. 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.~~held-for-investment and subserviced by a third party. 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,~~2023, we originated ~~$2.6 billion~~$464 million 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. The carrying value of this investment was $19 million as of June 30, 2023. 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,~~2023, we purchased ~~$1.6 billion~~$7 million of mortgage loans that were originated by third parties. Our mortgage loan purchases are held-for-investment.

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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~~offer senior-secured loans to ~~mostly~~private equity sponsor-owned U.S.-based middle-market companies ~~owned by private equity sponsors,~~ and ~~loans~~ to well-established asset managers that ~~primarily~~mostly 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

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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 lendingThe portfolio is ~~generally~~ composed of ~~first-lien, first-out~~floating-rate leveraged asset-based and cash flow/enterprise value loans. Our ~~focus is~~Sponsor Finance business focuses on ~~businesses~~companies 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, currently focused on lending to skilled nursing facilities, senior housing, and 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.buildings.

•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 equity investments through Ally Ventures, our strategic ~~investments,~~investment business. Additionally, Corporate and Other includes 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. Costs that are not allocated to our reportable operating segments as part of our COH methodology, which involves management judgment, are also included in Corporate and Other.

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. Ally Lending ~~currently~~primarily serves ~~medical~~home improvement and ~~home improvement~~medical 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,~~vertical had originations of ~~$343~~$546 million during the ~~second quarter of 2022~~six months ended June 30, 2023, and now represents approximately ~~58%~~62% of new ~~originations, and is expected to grow.~~originations. Point-of-sale lending broadens our capabilities, and expands our product offering into consumer unsecured personal 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~~Financial information related to our credit card business, Ally Credit Card, is included within Corporate and Other. ~~The acquisition provides us with a~~Ally Credit Card is our 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~~Ally Credit Card enhances our ability to grow and deepen both new and existing customer relationships.

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Management’s Discussion and Analysis

Ally Financial Inc. • Form 10-Q

~~Consolidated Results~~Dealer Financial Services

Dealer Financial Services comprises the following two segments.

•Automotive Finance operations— One of ~~Operations~~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

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. 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

Our Corporate Finance operations provide senior secured leveraged asset-based and cash flow 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, currently focused on lending to skilled nursing facilities, senior housing, and medical office buildings.

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 equity investments through Ally Ventures, our strategic investment business—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 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 on a match funded basis, aligned with the expected duration and the benchmark rate curve plus an assumed credit spread. Match funding 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 corporate level. The net residual impact of the FTP methodology is included within the results of Corporate and Other.

The ~~following table summarizes~~information presented in our ~~consolidated~~reportable operating ~~results~~segments is based in part on internal allocations and methodologies, including a COH methodology, which involves management judgment. COH methodology is used for measuring the ~~periods shown. Refer~~profit and loss of our reportable operating segments. We have various enterprise functions, such as technology, marketing, finance, compliance, internal audit, and risk. Operating expenses from the enterprise functions are either directly allocated to the reportable operating segment, ~~sections~~indirectly allocated to the reportable operating segment utilizing the COH methodology, or remain in Corporate and Other. COH methodology considers the reportable operating segment expense base and enterprise function expenses. The reportable operating segment expense base is used to determine the allocation mix. This mix is applied to the allocable expenses in Corporate and Other to determine the COH for the respective reportable operating segment. Allocable enterprise function costs are primarily technology and marketing expenses. Generally, costs that remain within Corporate and Other that are not allocated to our reportable operating segments include marketing sponsorships, treasury and other corporate activities, and charitable contributions.

Table of ~~the MD&A that follows~~Contents

Notes to Condensed Consolidated Financial Statements (unaudited)

Ally Financial Inc. • Form 10-Q

Financial information for ~~a more complete discussion of~~our reportable operating ~~results by business line.~~segments is summarized as follows.

Three months ended June 30, Six months ended June 30,
($ in millions) 2022 2021 Favorable/(unfavorable) % change 2022 2021 Favorable/(unfavorable) % change
Net financing revenue and other interest income
Total financing revenue and other interest income $ 2,450 $ 2,127 15 $ 4,761 $ 4,219 13
Total interest expense 467 498 6 868 1,055 18
Net depreciation expense on operating lease assets 219 82 (167) 436 245 (78)
Net financing revenue and other interest income 1,764 1,547 14 3,457 2,919 18
Other revenue
Insurance premiums and service revenue earned 280 278 1 560 558 —
Gain on mortgage and automotive loans, net 4 19 (79) 18 55 (67)
Loss on extinguishment of debt — (73) 100 — (74) 100
Other (loss) gain on investments, net (124) 65 n/m (119) 188 (163)
Other income, net of losses 152 249 (39) 295 376 (22)
Total other revenue 312 538 (42) 754 1,103 (32)
Total net revenue 2,076 2,085 — 4,211 4,022 5
Provision for credit losses 304 (32) n/m 471 (45) n/m
Noninterest expense
Compensation and benefits expense 437 446 2 930 841 (11)
Insurance losses and loss adjustment expenses 89 74 (20) 147 137 (7)
Other operating expenses 612 555 (10) 1,183 1,040 (14)
Total noninterest expense 1,138 1,075 (6) 2,260 2,018 (12)
Income from continuing operations before income tax expense 634 1,042 (39) 1,480 2,049 (28)
Income tax expense from continuing operations 152 143 (6) 343 354 3
Net income from continuing operations $ 482 $ 899 (46) $ 1,137 $ 1,695 (33)
Financial ratios:
Return on average assets (a) 1.06 % 1.99 % n/m 1.26 % 1.88 % n/m
Return on average equity (a) 13.36 % 21.88 % n/m 14.98 % 21.61 % n/m
Equity to assets (a) 7.92 % 9.11 % n/m 8.40 % 8.72 % n/m
Common dividend payout ratio (b) 21.28 % 7.82 % n/m 18.24 % 8.35 % n/m

~~n/m = not meaningful~~


Three months ended June 30, ($ in millions)	Automotive Finance operations		Insurance operations		Mortgage Finance operations		Corporate Finance operations		Corporate and Other		Consolidated (a)
2023
Net financing revenue and other interest income	$	1,349	$	29	$	53	$	92	$	50	$	1,573
Other revenue	83		337		5		28		53		506
Total net revenue	1,432		366		58		120		103		2,079
Provision for credit losses	331		—		—		15		81		427
Total noninterest expense	600		358		37		33		221		1,249
Income (loss) from continuing operations before income tax expense	$	501	$	8	$	21	$	72	$	(199)	$	403
Total assets	$	113,757	$	8,890	$	18,997	$	10,190	$	45,407	$	197,241
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

(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.~~

We earned net income from continuing operations of $482 million and $1.1 billion for the three months and six months ended June 30, 2022, respectively, compared to $899 million and $1.7 billion for the three months and six months ended June 30, 2021. During the three months and six months ended June 30, 2022, results were favorably impacted by higher financing revenue and other interest income within the automotive and credit card loan portfolios, as well as lower interest expense. These items were more than offset by higher provision for credit losses, unrealized losses on equity securities, and noninterest expense for the three months and six months ended June 30, 2022.

Net financing revenue and other interest income ~~increased $217 million~~after the provision for credit losses totaled $1.1 billion and ~~$538 million~~$1.5 billion for the three months ended June 30, 2023, and 2022, respectively.


Six months ended June 30, ($ in millions)	Automotive Finance operations		Insurance operations		Mortgage Finance operations		Corporate Finance operations		Corporate and Other		Consolidated (a)
2023
Net financing revenue and other interest income	$	2,671	$	55	$	107	$	195	$	147	$	3,175
Other revenue	160		718		9		57		60		1,004
Total net revenue	2,831		773		116		252		207		4,179
Provision for credit losses	682		—		(1)		30		162		873
Total noninterest expense	1,206		673		75		78		483		2,515
Income (loss) from continuing operations before income tax expense	$	943	$	100	$	42	$	144	$	(438)	$	791
Total assets	$	113,757	$	8,890	$	18,997	$	10,190	$	45,407	$	197,241
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

(a)Net financing revenue and other interest income after the provision for credit losses totaled $2.3 billion and $3.0 billion for the six months ended June 30, 2023, and 2022, ~~respectively,~~respectively.

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Notes to Condensed Consolidated Financial Statements (unaudited)

Ally Financial Inc. • Form 10-Q

23. 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 ~~compared~~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.

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 ~~three months~~Consolidated Financial Statements in our 2022 Annual Report on Form 10-K for additional information related to our policy for establishing accruals.

The course and ~~six months ended June 30, 2021. Consumer automotive revenue increased~~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 ~~average consumer assets contributed~~or lower than any amounts accrued or estimated for those matters and other exposures, possibly to a significant degree.

Subject to the ~~increase~~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 ~~revenue resulting from growth~~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.

24. Subsequent Events

Declaration of Common Dividend

On July 17, 2023, our Board declared a quarterly cash dividend of $0.30 per share on all common stock. The dividend is payable on August 15, 2023, to stockholders of record at the close of business on August 1, 2023.

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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 ~~used-vehicle portfolio, primarily through franchised dealers, as well as increases in portfolio yields. The increases were also impacted~~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 ~~acquisition~~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.

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

•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 ~~Credit Card in December 2021. We experienced lower interest expense for the three months~~Bank, including its digital focus;

•our ability to optimize our automotive finance and ~~six months ended June 30, 2022, as compared~~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 acceptable to the ~~same periods in 2021, driven by market and industry dynamics that drove a decrease in our funding costs,~~FRB and our ~~continued shift~~ability to ~~more cost-efficient deposit funding. Within~~ implement them, including any payment of dividends or share repurchases;

•our ~~Automotive Finance~~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 or expectations;

•our ability to cost-effectively fund our business and operations, ~~total net operating lease revenue decreased $125 million~~including through deposits and ~~$146 million for~~ the ~~three months~~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;

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Management’s Discussion and ~~six months ended June 30, 2022, respectively, compared~~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 ~~same periods~~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 ~~2021, driven~~the credit, liquidity, or other financial condition of our customers, counterparties, service providers, or competitors;