GMAC Inc. posted its first quarterly profit in nearly three years and said it is contemplating an initial public offering to help the car and home lender repay some of its $17.3 billion of federal bailout funds.
The company made $162 million, compared with a loss of $675 million a year earlier, as auto sales improved and the mortgage unit, Residential Capital LLC (which GMAC has been trying to sell), reduced its liability for loan repurchases and unloaded assets.
ResCap posted a pretax profit of $175 million in the first quarter while GMAC's North American automotive unit cleared $653 million.
"The core business did pretty well," said Kirk Ludtke, a senior vice president at CRT Capital Group LLC, a Stamford, Conn., investment bank.
On a conference call Monday, GMAC's chief executive, Michael A. Carpenter, said he plans to meet with Treasury Department officials Tuesday to discuss several matters "which may well include an IPO [to] allow us to repay [the] Treasury in a reasonable period of time." The government has a 56% stake in GMAC.
Underscoring its transition from the captive finance unit of General Motors Corp. to a bank holding company that also finances sales of vehicles made by Chrysler, Saab and the recreational-vehicle maker Thor Industries, GMAC said it plans to change its name to Ally Financial Inc. on May 10.
The lender can only use the GMAC brand until 2016, Carpenter said, so "we need to move on from that name" eventually. And the Ally handle "has gained significant momentum through Ally Bank," GMAC's depository.
The $56 billion-asset bank has sparked controversy in recent years with provocative advertisements and high rates on certificates of deposit.
Its deposits grew by $900 million in the quarter, to $32 billion, though Carpenter said "we don't expect to repeat the significant [deposit] increases we saw last year."
During the quarter GMAC settled roughly $400 million of loan repurchase requests with one of three major counterparties, none of which it identified. Ludtke said this will help make ResCap saleable because it reduces future liabilities for any potential buyer. GMAC ended the quarter with $890 million in reserves for loan repurchases, down from $1.3 billion in the fourth quarter.
Near the end of the call another analyst asked if there were any scenarios under which GMAC would consider keeping ResCap. Carpenter's response included a candid aside about corporate euphemisms.
"We haven't said that we are selling that part of the company," he said. "What we have said is that we have demonstrated that our intention is to sell some of the assets in the company and we have also said that strategically we are exploring alternatives. And that is code for selling."
But Carpenter stressed that there would be no fire sale.
"We are not sitting here as a distressed seller waiting for somebody to come along with a dollar to take it off our hands. So if there is an attractive transaction, we will go in that direction. If there is not, we will do something else."