General Motors’ (NYSE:GM) lending subsidiary, General Motors Financial (GM Financial), has withdrawn its deposit insurance application from the Federal Deposit Insurance Corporation (FDIC). This decision ends the company’s three-year effort to establish GM Financial as an industrial bank insured by the FDIC.
In 2020, GM Financial applied to both the Utah Department of Financial Institutions (UDFI) and the FDIC to establish an FDIC-insured industrial bank. Interestingly, the UDFI approved GM Financial Bank’s application earlier this month.
The goal was to gain the necessary approvals to create an industrial bank focused on auto lending and deposits.
GM Financial to Refile Application
Despite the recent withdrawal of the FDIC application, the automaker plans to refile the application to the FDIC. It intends to re-enter the banking sector and expand its auto-finance operations.
GM Financial remains optimistic about the feasibility and strength of its bank application.
Is GM a Good Stock to Buy?
General Motors stock is up about 35% year-to-date, reflecting a solid start to 2024. It delivered better-than-expected Q1 financials. Its first-quarter EPS of $2.62 handily surpassed the Street’s forecast of $2.13 per share.
Adding to the positives, General Motors recently approved a new share repurchase plan to buy $6 billion worth of the company’s stock. The company returned $11.6 billion to its shareholders through share repurchases and dividends in 2023.
GM stock has 12 Buys, three Holds, and one Sell recommendation for a Moderate Buy consensus rating. The analysts’ average GM stock price target is $56.47, implying 17.38% upside potential from current levels.
