Ally Financial on Tuesday said fourth-quarter profit rose 49 percent from a year ago as the Detroit-based lender posted higher revenue amid growth in loans and deposits.
But the company, whose CEO is based in Charlotte, said it remains unhappy with the performance of its stock, whose price has slumped 36 percent since an initial public offering about two years ago. At the outset of a conference call with analysts on Tuesday, CEO Jeffrey Brown expressed his frustrations with the stock.
“I hope it goes without saying that I’m obviously disappointed by the performance of the stock,” Brown said, “which I believe does not reflect the strength and results, the quality of this company and our leading franchises, the ability to deliver real returns for shareholders.”
Ally, a large U.S. auto lender and parent company of Ally Bank, has seen its stock price slide since its initial public offering at $25 on April 10, 2014. On Tuesday, Ally shares closed at $16.09, up less than 1 percent.
In the conference call, Ally executives did not discuss a dispute that erupted last year with an activist investor that has cited concerns about “the significant gap between the company’s intrinsic value and its stock price.”
New York-based Lion Point Capital has pushed for, among other things, Ally to form a strategic alternatives committee. Ally has opposed the move on grounds it might be widely regarded as a decision to pursue a sale.
Lion Point, a hedge fund, has argued that shareholders should get to vote on a nonbinding proposal directing Ally to form a strategic alternatives committee. Such a committee could evaluate “all strategic opportunities, of which a sale is only one option,” Lion Point has said.
Brown, who was promoted to his position early last year, said a variety of factors could be dragging down the stock’s price, including investor fears of an auto bubble.
Nationwide, some investors have worried that increased lending to borrowers with weakened credit could fuel such a bubble. Shortly after being named CEO, Brown stated an interest in making more loans to borrowers with non-prime credit ratings.
“While, yes, we took some additional steps to more non-prime lending this year, it was all done ... in a very reasonable way,” Brown told analysts Tuesday.
“You’re not going to find a much cleaner book (of loans) out there,” he said. “We’ve got to demonstrate there’s not a credit fear, there’s not an auto bubble. And then we’ve also got to demonstrate that there’s smart and reasonable growth.”
Ally reported net income of $263 million, compared with $177 million a year ago. On a per-share basis, the company reported a loss of $1.97, a decline it largely attributed to the redemption of preferred securities.
Adjusted earnings, which exclude the securities redemption and other items, were 52 cents per share, 1 cent higher than the average estimate of analysts.