Ally Financial reported strong loan and deposit growth in the first quarter, but a shift in the makeup of its automobile loan portfolio forced the Detroit company to nearly double its loan-loss provision from a year earlier.
The $156.5 billion-asset Ally said Tuesday that it earned $250 million in the quarter, or 52 cents per share excluding certain one-time charges. It earned $576million in last year’s first quarter, but that figure was skewed by a large one-time gain.
Its income from auto lending increased 10% year over year, to $337 million, thanks in part to increased yields on loans. However, Ally said that it increased its loss provision by 90%, to $220 million, as it removed leased assets from its books and added loan assets.
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The deal to buy TradeKing would allow the online-only bank to offer wealth-building products to its roughly 1.1 million depositors. The additional low-cost deposits could also help fund loan growth as it looks to expand beyond auto lending and into mortgages and credit cards.
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Ally Financial in Detroit reached a truce with Lion Point Capital, as it agreed to appoint an independent director in consultation with the activist investor.
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The company also said that total deposits at its Ally Bank unit increased 17% year over year, to $59 billion. At March 31 it had 1.1 million deposit customers, up 16.9% from a year earlier.
Ally said that more than one-third of its deposit customers are millennials. It added roughly 53,000 new customers in the first quarter of the year, roughly half of them millennials, it said.
