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GMAC Financial Services Reports Preliminary Third Quarter 2009 Financial Results.

Article Excerpt
- Third quarter net loss of $767 million - Net loss from continuing operations of $671 million - Focus remains on strengthening strategic operations and exiting non-strategic assets - Originated $7.7 billion and $15.9 billion of auto and mortgage loans, respectively - Launched dealer rewards program to promote growth in auto-related operations - Re-entered ABS market with TALF-eligible transactions and participated in the TLGP with debt offering - Ally Bank increased total deposits by $2.3 billion - Tier 1 capital ratio was 14.4 percent

NEW YORK, Nov. 4 /PRNewswire/ -- GMAC Financial Services today reported a third quarter 2009 net loss of $767 million, compared to a net loss of $2.5 billion in the third quarter of 2008. Results in the quarter were adversely affected by losses related to legacy assets in the mortgage operations.

During the quarter, certain business lines were classified as discontinued operations. These businesses, which include GMAC's U.S. consumer property and casualty insurance business and three international automotive financing operations, have been removed from the company's continuing operations. Excluding these businesses, net loss from continuing operations totaled $671 million in the third quarter of 2009, compared to $2.5 billion in the comparable prior year period. Continuing operations in the quarter were affected by several significant items, including:

-- $515 million mortgage repurchase reserve expense; -- $161 million loss provision on resort finance assets; -- $309 million original issue discount amortization expense related to the December 2008 bond exchange; -- $79 million legacy mortgage provision expense; -- $292 million tax benefit on operating losses; -- $155 million mark-to-market gain on auto retained interests; and -- $23 million net recovery on commercial and international portfolio marks/write-downs.

Excluding these items, GMAC's net loss from continuing operations in the third quarter was $77 million.

Third Quarter Financial Highlights ($ in millions) Pre-tax Income/(Loss) From Continuing Operations by Segment Increase/(Decrease) vs. ---------------- 3Q 09 2Q 09 3Q 08 2Q 09 3Q 08 ----- ----- ----- ----- ----- Automotive Finance - North America $345 $302 $(323) $43 $668 Automotive Finance - International 50 45 (56) 5 106 -------------------- --- --- --- --- --- Global Automotive Finance 395 347 (379) 48 774 Insurance 81 95 73 (14) 8 Mortgage Operations (747) (2,044) (1,949) 1,297 1,202 Corporate and Other(1) (692) (616) (384) (76) (308) ------------------------- ---- ---- ---- --- ---- Pre-tax loss from continuing operations (963) (2,218) (2,639) 1,255 1,676 Income tax expense (benefit) (292) 1,099 (101) (1,391) (191) Discontinued Operations(2) (96) (586) 15 490 (111) ---------------- --- ---- --- --- ---- Net income (loss) $(767) $(3,903) $(2,523) $3,136 $1,756

(1) Corporate and Other segment includes Commercial Finance, equity investments, amortization of original issue discount from GMAC bond exchange, and other corporate activities.

(2) Discontinued Operations currently includes: U.S. consumer property and casualty insurance (Insurance segment); Argentina operations, U.K. full-service leasing and Italy full-service leasing from International Operations (Global Automotive Finance segment). Other businesses may be included in discontinued operations in the future.

"We continue to work through solutions for certain legacy assets and that is still weighing on GMAC's financial performance," said GMAC Chief Executive Officer Alvaro G. de Molina. "Progress is being made toward the transformation of the company as we shed non-strategic operations while at the same time invest in structuring the company to be more competitive for the long term."

"Our focus is on growing operations where we can leverage our strengths," said de Molina. "We have made major strides in bringing the Chrysler business on line, we launched a competitive dealer program that leverages our full suite of auto products, and Ally Bank continues to attract customers."

Liquidity and Capital

GMAC's consolidated cash and cash equivalents were $14.2 billion as of Sept. 30, 2009, down from $18.7 billion at June 30, 2009. Included in the consolidated cash and cash equivalents balance are: $919 million at Residential Capital, LLC (ResCap); $5.0 billion at Ally Bank, which excludes $5.2 billion of intercompany overnight funds on deposit at Ally Bank; and $75 million at the insurance business. The decrease in consolidated cash reflects investment into high quality debt securities and the repayment of unsecured debt maturities.

GMAC's total equity at Sept. 30, 2009 was $24.9 billion, down from $26.0 billion at...