Slide 1: Ally Financial Inc. 2Q 2019 Earnings Review
Ally Financial Inc. 2Q 2019 Earnings Review July 18, 2019 2Q 2019 Preliminary Results Contact Ally Investor Relations at (866) 710-4623 or investor.relations@ally.com 1
Slide 2: Forward-Looking Statements and Additional Information
Forward-Looking Statements and Additional Information This presentation and related communications should be read in conjunction with the financial statements, notes, and other information contained in our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K.
Slide 3: GAAP and Core Results
GAAP and Core Results ($ millions except per share data) 2Q 19 1Q 19 4Q 18 3Q 18 2Q 18 GAAP net income attributable to common shareholders ("NIAC") $ 582 $ 374 $ 290 $ 374 $ 349 Core net income attributable to common shareholders (1)(2) $ 387 $ 325 $ 382 $ 386 $ 358 GAAP earnings per common share ("
Slide 4: Second Quarter 2019 Highlights
Second Quarter 2019 Highlights Ongoing Execution and Sustained Progress > Adjusted EPS(1) of 97 cents – up 17% YoY | Core ROTCE(1) of 12.4% ▪ Adjusted total net revenue(1) of $1.56 billion – up 6% YoY > Sustained optimization of auto business – higher risk-adjusted returns continue ▪ Consumer auto o
Slide 5: Core Metric Trends
Core Metric Trends Adjusted Earnings Per Share(1) Adjusted Total Net Revenue(2) ($ millio ns) $0.97 $1,556 $1,557 $0.91 $0.92 $1,521 $1,535 $0.83 $1,472 $1,480 $1,492 $393 $393 $0.80 $1,463 $1,471 $396 $392 $379 $356 $0.70 $0.68 $1,399 $1,391 $388 $381 $394 $0.65 $1,372 $1,383 $0.58 $388 $0.54 $0.56
Slide 6: Second Quarter 2019 Financial Results
Second Quarter 2019 Financial Results ($ millions; except per share data) Increase / (Decrease) vs. 2Q 19 1Q 19 2Q 18 1Q 19 2Q 18 (1) Net financing revenue (excluding Core OID) $ 1,164 $ 1,139 $ 1,115 $ 25 $ 49 Core OID (7) (7) (21) (0) 14 Net financing revenue (as reported) $ 1,157 $ 1,132 $ 1,094
Slide 7: Balance Sheet and Net Interest Margin
Balance Sheet and Net Interest Margin ($ millions) 2Q 19 1Q 19 2Q 18 Average Average Average Balance Yield Balance Yield Balance Yield Retail Auto Loan $ 72,274 6.58% $ 70,981 6.47% $ 69,941 6.08% Auto Lease (net of depreciation) 8,370 5.94% 8,389 5.56% 8,583 5.09% Commercial Auto 34,757 4.75% 35,64
Slide 8: Deposits
Deposits • Total deposits of $116.3 billion, up 18% YoY Retail Deposit Balance Growth – Customer retention of 96% - stable and strong • Deposits represent 72% of total funding(1) Deposit Levels (EOP) and Customer Retention Rate Cumulative retail portfolio beta of 48% since 3Q 15 ($ billions) • $113.
Slide 9: Capital
Capital • Preliminary fully phased-in Basel III CET1 ratio of Capital Ratios(1) and Risk-Weighted Assets 9.5% – QoQ increase driven by ongoing earnings growth and a 12.6% 12.7% 12.3% 12.5% 12.7% 11.1% 11.1% 10.8% 11.0% 11.2% discrete tax benefit on a valuation allowance release of 9.5% 9.3% 9.4% 9.1
Slide 10: Asset Quality
Asset Quality Consolidated Net Charge-Offs Provision Expense ($ millions) 1.01% Provision Expense 2Q 18 3Q 18 4Q 18 1Q 19 2Q 19 0.85% 0.84% 0.85% Retail Auto $ 168 $ 229 $ 261 $ 257 $ 180 0.75% 0.73% Commercial Auto 2 - 1 5 - 0.57% 0.56% Mortgage Finance - 2 (3) 2 - Corporate Finance (6) 8 10 23 3 1
Slide 11: Auto Finance – Results
Auto Finance – Results • Pre-tax income of $459 million, up $77 million YoY Increase/(Decrease) vs. and up $130 million QoQ Key Financials ($ millions) 2Q 19 1Q 19 2Q 18 Net financing revenue $ 1,022 $ 42 $ 97 – Net financing revenue increased QoQ and YoY due to Total other revenue 61 (7) (2) Total
Slide 12: Auto Finance – Key Metrics
Auto Finance – Key Metrics Consumer Originations Origination Mix ($ billions; % of $ originations) (% of $ originations) $9.5 $9.6 $9.7 $9.2 $8.1 $8.2 50% 51% 52% 53% 56% 54% 44% 45% 50% 49% 47% 47% 11% 13% 12% 10% 10% 11% 26% 28% 25% 27% 26% 25% 39% 36% 35% 38% 34% 35% 30% 27% 26% 27% 26% 25% 11% 1
Slide 13: Insurance
Insurance • Pre-tax income breakeven for 2Q 19, down $11 Increase/(Decrease) vs. million YoY and down $145 million QoQ Key Financials ($ millions) 2Q 19 1Q 19 2Q 18 Premiums, service revenue earned and other $ 263 $ (2) $ 22 • Core pre-tax loss(1) of $4 million, down $7 million YoY Losses and loss a
Slide 14: Corporate Finance
Corporate Finance • Pre-tax income of $46 million Increase/(Decrease) vs. Key Financials ($ millions) 2Q 19 1Q 19 2Q 18 • Core pre-tax income(1) of $48 million, up $39 million Net financing revenue $ 61 $ 7 $ 4 QoQ and down $10 million YoY Total other revenue (adjusted) (1) 12 5 (2) Total net revenu
Slide 15: Mortgage Finance
Mortgage Finance • Pre-tax income of $14 million Increase/(Decrease) vs. Key Financials ($ millions) 2Q 19 1Q 19 2Q 18 – Net financing revenue up YoY driven by asset balance Net financing revenue $ 46 $ (4) $ 2 growth from bulk purchase activity Total other revenue 4 2 2 Total net revenue $ 50 $ (2)
Slide 16: Conclusion
Conclusion Consistent Execution Along Our Strategic Path > Ongoing optimization of auto & insurance Dominant Franchises Leading Leading Auto Finance > Sustained deposit growth & customer acquisition Digital Insurance Bank Partner > Scale in expanded digital product offerings > Efficient capital mana
Slide 17: Supplemental
Supplemental 17 2Q 2019 Preliminary Results
Slide 18: Results by Segment
Supplemental Results by Segment Pre-Tax Income Increase/(Decrease) vs. ($ millions) 2Q 19 1Q 19 2Q 18 1Q 19 2Q 18 Automotive Finance $ 459 $ 329 $ 382 $ 130 $ 77 Insurance - 145 11 (145) (11) Dealer Financial Services $ 459 $ 474 $ 393 $ (15) $ 66 Corporate Finance 46 13 58 33 (12) Mortgage Finance
Slide 19: Funding and Liquidity
Supplemental Funding and Liquidity • Ally Bank funded assets at 91% up 5 pts YoY Growth in Bank Funded Assets • Deposits at 72% of total funding (excluding Core ($ billions) $180.4 OID balance)(a) up 8 pts YoY $156.3 $157.9 $164.3 $171.3 • Wholesale funding in 2Q: 91% – $0.76 billion of new retail s
Slide 20: Corporate and Other
Supplemental Corporate and Other • Corporate and Other includes the impact of Increase/(Decrease) vs. centralized asset and liability management, Key Financials ($ millions) 2Q 19 1Q 19 2Q 18 corporate overhead allocation activities, the Net financing revenue $ 13 $ (23) $ (42) Total other revenue 3
Slide 21: Interest Rate Sensitivity
Supplemental Interest Rate Sensitivity Net Financing Revenue Impacts (1): Baseline vs. Forward Curve 2Q 19 1Q 19 ($ millions) Gradual (2) Instantaneous Gradual (2) Instantaneous -100 bp $ (60) $ (147) $ 5 $ (10) +100 bp $ 43 $ 28 $ 3 $ (23) Stable rate environment n/m $ (60) n/m $ (0) (1) Net financ
Slide 22: Deferred Tax Asset
Supplemental Deferred Tax Asset Deferred Tax Asset 2Q 19(1) 1Q 19(1) ($ millions) Gross DTA/(DTL) Valuation Net DTA/(DTL) Net DTA/(DTL) Balance Allowance Balance Balance Net Operating Loss (Federal) $ 8 $ - $ 8 $ 8 Tax Credit Carryforwards 1,471 (757) 714 662 State/Local Tax Carryforwards 143 (95) 4
Slide 23: Notes on Non-GAAP and Other Financial Measures
Supplemental Notes on Non-GAAP and Other Financial Measures The following are non-GAAP financial measures which Ally believes are important to the reader of the Consolidated Financial Statements, but which are supplemental to, and not a substitute for, GAAP measures: Adjusted Earnings per Share (Adj
Slide 24: GAAP to Core Results – Adjusted Earnings per Share
Supplemental GAAP to Core Results – Adjusted Earnings per Share Adjusted Earnings per Share ("Adjusted EPS") QUARTERLY TREND 2Q 19 1Q 19 4Q 18 3Q 18 2Q 18 1Q 18 4Q 17 3Q 17 2Q 17 1Q 17 4Q 16 3Q 16 2Q 16 Numerator ($ millions) GAAP net income attributable to common shareholders $ 582 $ 374 $ 290 $ 37
Slide 25: GAAP to Core Results – Adjusted TBVPS
Supplemental GAAP to Core Results – Adjusted TBVPS Adjusted Tangible Book Value per Share ("Adjusted TBVPS") QUARTERLY TREND 2Q 19 1Q 19 4Q 18 3Q 18 2Q 18 1Q 18 4Q 17 3Q 17 2Q 17 1Q 17 4Q 16 3Q 16 2Q 16 Numerator ($ billions) GAAP common shareholder's equity $ 14.3 $ 13.7 $ 13.3 $ 13.1 $ 13.1 $ 13.1
Slide 26: GAAP to Core Results – Core ROTCE
Supplemental GAAP to Core Results – Core ROTCE Core Return on Tangible Common Equity ("Core ROTCE") QUARTERLY TREND 2Q 19 1Q 19 4Q 18 3Q 18 2Q 18 Numerator ($ millions) GAAP net income attributable to common shareholders $ 582 $ 374 $ 290 $ 374 $ 349 Discontinued operations, net of tax 2 1 (1) - (1)
Slide 27: GAAP to Core Results – Adjusted Efficiency Ratio
Supplemental GAAP to Core Results – Adjusted Efficiency Ratio Adjusted Efficiency Ratio QUARTERLY TREND 2Q 19 1Q 19 4Q 18 3Q 18 2Q 18 Numerator ($ millions) GAAP noninterest expense $ 881 $ 830 $ 804 $ 807 $ 839 Rep and warrant expense (0) - 1 (0) 2 Insurance expense (301) (227) (215) (241) (268) Ad
Slide 28: Notes on Non-GAAP and Other Financial Measures
Supplemental Notes on Non-GAAP and Other Financial Measures Regulatory Capital - Basel III transition to fully phased-in ($ billions) 2Q 19 1Q 19 4Q 18 3Q 18 2Q 18 Numerator Common equity tier 1 capital $ 13.9 $ 13.6 $ 13.4 $ 13.4 $ 13.3 Denominator Risk-weighted assets (transition) $ 145.8 $ 145.9
Slide 29: Notes on Non-GAAP and Other Financial Measures
Supplemental Notes on Non-GAAP and Other Financial Measures ($ millions) 2Q 19 1Q 19 2Q 18 Change in the Change in the Change in the Core OID & Core OID & Core OID & fair value of fair value of fair value of GAAP Repositioning Non-GAAP (1) GAAP Repositioning Non-GAAP (1) GAAP Repositioning Non-GAAP
Slide 30: Notes on Non-GAAP and Other Financial Measures
Supplemental Notes on Non-GAAP and Other Financial Measures Net Financing Revenue (ex. Core OID) QUARTERLY TREND ($ millions) 2Q 19 1Q 19 4Q 18 3Q 18 2Q 18 1Q 18 4Q 17 3Q 17 2Q 17 1Q 17 4Q 16 3Q 16 2Q 16 GAAP Net Financing Revenue $ 1,157 $ 1,132 $ 1,140 $ 1,107 $ 1,094 $ 1,049 $ 1,094 $ 1,081 $ 1,0