CHARLOTTE, N.C. -

As the company’s chief executive officer shared his five broad perspectives about the ongoing economic crisis created by the coronavirus pandemic, Ally Financial also offered more details about how it’s worked with dealer clients.

During the company’s quarterly conference call with investors on Monday morning, Ally Financial chief financial officer Jennifer LaClair said 72% of dealers that have a commercial relationship with the company are using some form of relief it has offered like deferred payments.

Furthermore, LaClair noted that Ally participated in the Paycheck Protection Program orchestrated by the Small Business Administration and created by the CARES Act. She mentioned Ally funded “essentially all applicants,” representing more than $850 million in loans before the total amount of available federal funds expired last Thursday.

“The whole intention here is really to focus on the controllables, focus on keeping our market strong, our customers strong, and we believe that’s going to position us very well on the back end of this crisis,” LaClair said.

“Managing credit risk remains a top priority for us, and we know you’re focused on this topic, as well,” LaClair said later during Ally’s conference call when the company also revealed its first-quarter performance. “While we are not yet seeing deteriorating impacts on our credit performance. We’ve already adjusted our servicing strategies real time, including the roll-out of augmented staffing capacity, increased customer outreach and enhanced digital engagement.”

Despite the recent activity to help dealership’s Ally’s commercial portfolio has decreased during each of the past five quarters. The company finished Q1 with its average commercial balance sitting at $30.5 billion with $25.1 billion constituting dealer floorplan commitments. Those figures are down from the close of 2018 when Ally said they stood at $36.6 billion with $30.8 billion being in the floorplan category.

Meanwhile as far as originations in connection with retail vehicle sales, LaClair pointed out that dealership application and funding volume declined more than 50% as March unfolded when shelter-in-place orders took hold nationwide. All told, Ally reported that its Q1 auto originations came in at $9.1 billion, sourced from 3.0 million applications, figures on par with year-ago performances.

LaClair insisted that Ally is ready when activities accelerate again.

“Over time as the economy improves, we will be positioned to act swiftly on opportunities, including a potential increase in demand for use, prudently stepping in where others may have exited, providing adaptable solutions as we did with the expanded Carvana flow program and the SBA product launch for our dealers,” LaClair said.

View from the CEO

Ally reported that its auto-finance business posted a pre-tax loss of $173 million, down $502 million year-over-year, primarily due to higher provision for loan losses associated with reserve build given COVID-19 forecasted macroeconomic changes.

As an entire company, Ally said total Q1 net revenue softened 12.1% year-over-year to land at $1.41 billion, resulting in the company sustaining a $411 million net loss compared to the opening quarter of 2019.

Included with all of the quarterly figures, Ally chief executive officer Jeffrey Brown shared five different perspectives about the company’s situation and the U.S. economy. They included:

1. Environment is challenging, and unlike anything encountered

2. We recognize considerable uncertainty will remain for period of time and it remains difficult to predict when confidence will return

3. Ally will continue to rely on our values and strong culture. We will ‘Do It Right’ for our customers and teammates. Consistent approach will drive long-term shareholder value

4. Ally entered the current environment operating from a position of strength — strong capital and liquidity, investment grade ratings, proven deposit gatherer and scaled deposit and auto businesses

5. Near-term headwinds are tough, but will not disrupt Ally’s long-term strategy

“The sudden and severe nature of this shutdown has affected the world and our nation in a manner that has arguably never been replicated on a scale of this magnitude. It is within this context that I think it’s important to acknowledge that significant action across public and private sectors is necessary and should continue on a size and scale that has not been seen in modern history to directly address the outbreak that is already having negative impacts on workers, consumers, and citizens across America,” Brown said during Monday’s call.

“While some positive trends are emerging in regard to the spread of the virus, we still do not know how long it will take to return to a state of normalcy,” Brown continued. “At Ally, you’ve heard throughout our remarks this morning and as long as I’ve been in the chair, we are relentlessly focused on our customers. We’ve built a strong and vibrant culture around this mantra, and today we’re even more emboldened to act in accordance with these principles. This provides clarity for our customers and purpose for our teammates in a time of great uncertainty, and we are confident it will ultimately drive long-term shareholder value.

“We enter the current environment with a strong, well-positioned balance sheet with funding, capital and liquidity positioned to serve as sources of strength,” he added. “We’ve grown our auto and deposit offerings into dominant, adaptable franchises ready to continue delivering for our customers, while actively seeking new opportunities to expand. The headwinds we will experience in the near term, while admittedly challenging, will not impact our ability to deliver on our long-term strategies and vision.

“Over the past several years, the strong foundation we’ve built has allowed our company to thrive during economic expansion and positions us now to be a source of strength for all of our key constituents during this difficult time and when we begin to recover,” Brown went on to say. “Remaining disciplined in our customer focus and true to our values will allow us to emerge from this period stronger than before, resuming the trajectory of both financial and operational improvements we’ve delivered the past several years.”