Ally Financial reported net income of $250 million for the first quarter of 2016.
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This compares to net income of $576 million for the first quarter of 2015, which included a one-time gain of $397 million from discontinued operations resulting from the completed sale of the Chinese auto finance joint venture.
The company reported core pre-tax income of $412 million in the first quarter of 2016, increasing from $299 million in the comparable prior year period, which included a $190 million repositioning expense related to the early extinguishment of high-cost legacy debt.
The company reported core pre-tax income, excluding repositioning items, of $419 million in the first quarter of 2016, compared to $490 million in the prior year period, primarily due to a $65 million net gain on the sale of Troubled Debt Restructuring (TDR) mortgage loans a year ago that did not repeat.
Adjusted earnings per diluted common share for the quarter were $0.52, compared to $0.52 in the previous quarter and $0.52 in the prior year period. Ally reported generally accepted accounting principles (GAAP) earnings of $0.49 per common share in the first quarter of 2016.
Strong quarterly operating results continued to be driven by improved net financing revenue, excluding original issue discount (OID), which totaled $964 million in the first quarter of 2016, up from $860 million a year ago, as the result of strong loan growth.
Net interest margin (NIM), excluding OID, improved 16 basis points year-over-year to 2.63 percent, as a result of higher asset yields and the company's continued focus on lowering its cost of funds.
Ally incurred $220 million in provision expense, an increase of $104 million year-over-year, driven by the continued shift toward more retail auto loan assets on the balance sheet and fewer leasing assets which do not contribute to provision expense, as well as a full credit spectrum portfolio mix.
Also driving results was a non-recurring provision release from favorable credit performance on the dealer floorplan loans in the first quarter of 2015.
Credit performance during the quarter remained on target with net charge-offs up slightly year-over-year at 64 basis points, as the portfolio continued to perform within the company's expectations.
Ally experienced higher than normal first quarter weather losses in its insurance unit, increasing $22 million year-over-year. ■