CHARLOTTE, N.C. -

Without necessarily having to be too aggressive with underwriting to consumers lower down the credit spectrum, Ally Financial emphasized that it remains on track to reach its goal for originations this year despite the headwinds of not collecting as much business from direct relationships with General Motors and Chrysler.

The objective of hitting $40 billion worth of paper coming into the portfolio is within reach because Ally originated $11.1 billion in contracts during the third quarter. The performance pushed the company to $31.7 billion through the first nine months of the year.

“We remain on track to surpass our target for the year despite the shifts in the business,” Ally chief executive officer Jeffrey Brown said when the company hosted a conference call with investment analysts after sharing its Q3 financial statement. “The business is well-positioned in the marketplace, increasingly more diversified and poised to provide consistent returns.”

In his opening comments, Brown tried to nip any thinking that Ally would simply hit its targets by taking on more subprime paper.

“Yes, we’ve expanded risk appetite in the more non-prime flows, but we’re still fairly modest at sub-15 percent origination allocation and fully underwrite with the focus on the borrower’s ability and willingness to repay,” Brown said. “And that’s a fact not necessarily true with some of all the deep subprime players.”

Ally insisted that it generated 36 percent increase year-over-year consumer originations, which included $607 million of consumer loans and leases from Mitsubishi Motors Credit of America.  Brown pointed out the company collected the highest application volume across all dealer channels in Ally history during Q3. That application flow came from about 17,000 dealers across all 50 states.

“Despite some of the media noise … dealer relationships remain robust, and that was reinforced as I spent several weeks visiting with dealers across the U.S. over the past few months,” Brown said. “We’ve been saying for quite some time this is truly a relationship business and partnering so closely with the dealers allows us to continuously learn and adapt.”

As far as how that portfolio is performing, Ally reported that its delinquencies and net charge-offs in the auto space rose modestly in the third quarter. The delinquency reading moved up to 2.60 percent in Q3, up from 2.28 percent while Ally’s net charge-offs in its auto segment ticked up from 1.01 percent from 0.93 percent a year earlier.

“We continue to feel very good about where we see credit trends. We’re staying disciplined in our buy box and asset quality continues to perform within our expectations,” Ally chief financial officer Chris Halmy said.

As an entire company, Ally said its net income came in at $268 million in Q3. The figure compares to net income of $182 million in the prior quarter and $423 million for the third quarter of last year, which included $130 million in income from discontinued operations.

The company reported core pre-tax income of $431 million, excluding repositioning items, in the third quarter, compared to $435 million in the prior quarter and $467 million in the comparable prior year period. Adjusted earnings per diluted common share for the quarter were $0.51, compared to $0.46 in the previous quarter and $0.53 in the prior year period.

Ally also reported generally accepted accounting principles (GAAP) earnings of $0.47 per common share in the third quarter.

“Ally’s third quarter results demonstrate the ongoing strength of the operations and continued progress on our goals to diversify the business, achieve our financial targets and build upon our leading digital platform,” Brown said

“As we look ahead, our opportunities lie in our inherent strengths — a strong culture of agility and innovation, a proven track-record in digital financial services, a respected customer-centric brand, and a foundation of 5.5 million customers. We have taken initial steps in deepening our customer relationships and expect to expand our customer offerings in the year ahead,” he went on to say.