Ally Financial’s longtime CEO, Jeffrey Brown, is leaving the bank in January to lead Charlotte, North Carolina-based used car company Hendrick Automotive Group.
The bank did not name a successor in its press release Wednesday, but said Brown would address the transition Oct. 18 at Ally’s third-quarter earnings call.
"What began in 2009 as the financial reengineering of a company ultimately became a bank that truly matters in the financial industry, and now is the right time for me to transition,” Brown said in a statement. “Ally is positioned for a bright future thanks to our amazing team and the customers we are proud to support."
Brown joined the bank as corporate treasurer 14 years ago, shortly after it had been rebranded from GMAC Bank, a division of General Motors. The U.S. government, at the time, held a 74% stake in GMAC Bank, following a $17.2 billion bailout during the 2007-08 financial crisis.
Brown ascended to CEO in 2015, the year after the government sold its remaining $1.28 billion stake in the company.
Brown plans to remain at Ally until Jan. 31, 2024, though he may leave earlier if the chair of the board deems it necessary for a smoother transition, the bank said Wednesday.
Hendrick Automotive, meanwhile, is a longtime customer of Ally, which has had a focus on auto financing since GMAC was established in 1919.
"I especially look forward to building on Hendrick's relationship with Ally as a customer and seeing both businesses continue to grow and succeed,” Brown said.
The auto lending sector for which Ally is known, though, is facing headwinds. Analysts at Cox Automotive told Car and Driver this summer that “auto loan performance resumed deteriorating in May as delinquencies and defaults both increased for the first time in three months,” and that the severe delinquency rate for auto loans in May (1.7%) was the worst since 2006. The default rate, Cox noted, has nearly returned to elevated rates last seen in 2019.
Now, several banks are pulling back on their involvement in the sector. BMO announced in September it will no longer originate indirect auto loans, and Citizens Bank said early this year that it aimed to scale auto-lending portfolio back to between $5 billion and $6 billion by 2024. By July, the bank said it would stop originating indirect auto loans altogether to shield itself from a potential recession.
Ally hasn’t been immune: Job cuts that began earlier this month aimed to trim 5% off the company roster, amounting to some 500-plus people.
Ally had paused hiring in the past year, bank spokesperson Peter Gilchrist told Bloomberg in an email, but still had to make “the difficult choice to selectively reduce” its workforce.
Brown's departure could "signal a further recognition that higher-for-longer interest rates could weigh on their earnings outlook," Wells Fargo analyst Donald Fandetti wrote in a research note, according to American Banker.
Franklin Hobbs, chair of Ally’s board, said Brown “has been an exceptional leader and fellow director, steering Ally with a skilled, steady hand for nearly nine years.”
“He is held in the highest regard throughout the organization and the banking industry,” Hobbs said. “Colleagues and peers alike value his commitment to excellence, motivating ingenuity, and unrelenting dedication to the Ally culture."
