Ally Financial Inc. · NYSE:ALLY
Ally Financial — FY2010 Earnings Presentation
43 slides from Ally Financial's earnings presentation, Feb 1, 2011
Slide 1: 4Q and Full Year 2010 Earnings Review
Ally Financial Inc. 4Q and Full Year 2010 Earnings Review February 1, 2011 Contact Ally Investor Relations at (866) 710-4623 or investor .relations@ally ..com
Slide 2: Forward-Looking Statements and Additional Information
Forward - -Looking Statements and Additional Information The following should be read in conjunction with the financial statements, notes and other information contained in the Company’s 2009 Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K. This informatio
Slide 3: 2010 Achievements
2010 Achievements • Ally earned core pre-tax income (1) of $533 million and net income of $79 million in 4Q10 – $2.5 billion of core pre-tax income (1) and $1.1 billion of net income in 2010 • Successful execution of strategic objectives in 2010 Premier Auto Finance Provider De-Risk Mortgage Busines
Slide 4: Premier Auto Finance Franchise
Premier Auto Finance Franchise Uniquely positioned in an attractive market … • Stable, low loss, secured credit exposure • Positioned to grow with economic recovery • Auto manufacturers and dealers have emerged from crisis much healthier and more stable with leading competitive advantages • Combinat
Slide 5: MCP Conversion Represents Critical Milestone
MCP Conversion Represents Critical Milestone • On December 30, 2010, Ally Financial and the U.S. Treasury agreed to convert $5.5 billion of the $11.4 billion of mandatory convertible preferred (“MCP”) securities into common equity shares • This action represents a critical step along Ally’s path to
Slide 6: Fourth Quarter and Full Year 2010 Results Key Statistics
Fourth Quarter and Full Year 2010 Results Key Statistics ($ millions) 4Q 10 3Q 10 4Q 09 FY 2010 FY 2009 Total net revenue (ex. OID) $ 2,209 $ 2,357 $ 1,889 $ 9,202 $ 7,638 Provision for loan losses 71 9 3,063 442 5,604 Controllable expenses (1) 923 838 1,168 3,506 4,022 Other noninterest expenses 68
Slide 7: Results by Segment
Results by Segment • Positive origination and credit trends continue in Global Automotive Services • Ally will begin reporting Mortgage Origination and Servicing separately from the Legacy Portfolio • Mortgage repurchase expense of $180 million down from $344 million in 3Q • Mortgage Origination and
Slide 8: Asset Quality Summary
Asset Quality Summary • Credit quality continued to improve quarter -over-quarter • Allowance coverage remains strong relative to net charge -offs and non-performing loans – Portfolio continues migration to higher quality asset mix • Loan balances grew quarter -over-quarter driven by continued stron
Slide 9: North American Automotive Finance
North American Automotive Finance • North American segment reported pre-tax income of $589 million – Improving credit quality and asset mix driving lower provision expense – Gain on sale revenue increased $24 million compared to 3Q • U.S. originations increased 72% year-over-year driven by strength
Slide 10: International Automotive Finance
International Automotive Finance • International operations earned $12 million of pre-tax income compared to $74 million in 3Q – Net revenue lower by $29 million, primarily driven by foreign exchange and one-time items from operations in wind down – 3Q provision expense includes favorable adjustment
Slide 11: Global Auto Finance – Consumer Credit Trends
Global Auto Finance – Consumer Credit Trends Global Delinquencies - Managed Retail Contract Amount • Retail loss and delinquency experience improved $ Amount of Accruing Contracts Greater than 30 Days Past Due (millions) $2,500 3.48% 3.5% significantly throughout 2010 3.46% 2.87% 2.93% 3.0% $2,000 –
Slide 12: Insurance
Insurance • Pre-tax income increased $50 million from 3Q to $164 million in 4Q – Increase primarily driven by strong investment income • Written premiums declined at DP&S due to typical seasonal trends in used vehicle service contracts – Premiums up 14% year-over-year due to improvement in auto sale
Slide 13: Mortgage Operations – Origination and Servicing
Mortgage Operations – Origination and Servicing • Strategic focus on strength in agency origination and servicing – ResCap platform supports business – More consistent profitability – Minimal balance sheet usage – Demonstrated strength as 5th largest servicer • Pre-tax income of $172 million in 4Q –
Slide 14: Mortgage Operations – Legacy Portfolio and Other
Mortgage Operations – Legacy Portfolio and Other • Remaining credit risks have been ring-fenced through a series of strategic actions • Current legacy HFS portfolio of $1.8 billion carry value (marked at 45% of UPB) • Legacy Ally Bank HFI portfolio of $8.0 billion carry value – Riskier loans removed
Slide 15: Mortgage Repurchase Reserves
Mortgage Repurchase Reserves • Ally has proactively addressed repurchase risk through settlements and established reserves • Completed settlements with seven counterparties, including both Freddie Mac and Fannie Mae • GSE experience mature at this point with limited remaining exposure • Reserve bala
Slide 16: Ally is Proactively Addressing Repurchase Risk
Ally is Proactively Addressing Repurchase Risk Settlement Summary • Settlements reached with two primary mortgage counterparties in 2010, which resolve material agency repurchase risk • Freddie Mac settlement covers all ResCap serviced agency loans sold prior to January 1, 2009 • Fannie Mae settleme
Slide 17: Private Label Securitizations
Private Label Securitizations Notable Differences from GSE Sales • Underwriting exceptions disclosed • Breach must be proven to be “material and adverse” • Representations and warranties not as comprehensive • Different fraud representation and warranty standards • Collateral segregated into differe
Slide 18: Loan Modifications and Foreclosure Process Update
Ally Strives to Maintain Home Ownership Leader in Loan Modifications • Demonstrated leadership position in loan workouts and modifications – Highest HAMP conversion rate among 5 largest servicers – 2.24x modification to foreclosure rate – Completed more than 612,238 default workouts for borrowers si
Slide 19: Ally Bank Franchise Strategy
Ally Bank Franchise Strategy Brand and Marketing Strategy • Do Right – Advocate, strive for customer satisfaction • Be Obviously Better – Intelligent experience, win-win, be a challenger • Operate in a safe and sound manner at all times Compelling Value Proposition • Full spectrum of product offerin
Slide 20: Deposits
Deposits Deposit rates declining as maturity extending Average CD Maturity and Rate (months) 30.0 4.00% 25.0 26.8 27.7 2.59% 25.5 3.00% 24.2 20.0 2.34% 2.00% 1.82% 1.76% 1.71% 15.0 2.00% 10.0 12.8 11.3 1.00% 5.0 0.0 0.00% 3Q 09 4Q 09 1Q 10 2Q 10 3Q 10 4Q 10 Avg. Maturity of Newly Originated CDs Avg.
Slide 21: Liquidity
Liquidity • Ally maintains a conservative liquidity posture with total parent company available liquidity of $23.8 billion(1) • Manageable upcoming debt maturities with limited required unsecured issuance • Significant progress in 2010 with $36 billion of new funding transactions in the U.S. and abr
Slide 22: Capital Ratios
Capital Ratios • Ally’s capital structure now in line with investment grade banks – Improvement in Tier 1 Common Capital primarily driven by U.S. Treasury conversion of MCP into common equity – Tier 1 and Total Capital ratios down due to slightly higher risk weighted assets and results net of divide
Slide 23: Summary
Summary 2010 Recap • Achieved all strategic objectives targeted for 2010 • Profitable in each quarter of 2010, including Ally Bank and ResCap • Reestablished Ally as preeminent auto finance company • Meaningful diminution of legacy mortgage risk with asset sales and rep and warrant settlements • MCP
Slide 24: Charts
Supplemental Charts
Slide 25: Condensed Consolidated Income Statement
Supplemental Condensed Consolidated Income Statement ($ millions) 4Q 10 3Q 10 4Q 09 FY 2010 FY 2009 Total financing revenue and other interest income $ 2,662 $ 2,777 $ 3,043 $ 11,447 $ 13,100 Interest expense 1,738 1,733 1,626 6,836 7,274 Depreciation expense on operating lease assets 394 454 741 2,
Slide 26: North American Auto - Condensed Income Statement
Supplemental North American Auto - Condensed Income Statement ($ millions) 4Q 10 3Q 10 4Q 09 FY 2010 FY 2009 Total financing revenue and other interest income $ 1,747 $ 1,810 $ 2,063 $ 7,595 $ 8,937 Interest expense 575 580 559 2,377 2,363 Depreciation expense on operating lease assets 374 430 701 1
Slide 27: International Auto - Condensed Income Statement
Supplemental International Auto - Condensed Income Statement ($ millions) 4Q 10 3Q 10 4Q 09 FY 2010 FY 2009 Total financing revenue and other interest income $ 435 $ 431 $ 517 $ 1,744 $ 2,128 Interest expense 252 233 264 924 1,176 Depreciation expense on operating lease assets 25 24 40 137 247 Net f
Slide 28: Mortgage Origination and Servicing - Condensed Income Statement
Supplemental Mortgage Origination and Servicing - Condensed Income Statement ($ millions) 4Q 10 3Q 10 4Q 09 FY 2010 FY 2009 Total financing revenue and other interest income $ 135 $ 130 $ 99 $ 460 $ 362 Interest expense 137 125 104 486 420 Net financing revenue (2) 5 (5) (26) (58) Servicing fees 338
Slide 29: Legacy Portfolio and Other - Condensed Income Statement
Supplemental Legacy Portfolio and Other - Condensed Income Statement ($ millions) 4Q 10 3Q 10 4Q 09 FY 2010 FY 2009 Total financing revenue and other interest income $ 264 $ 325 $ 342 $ 1,332 $ 1,559 Interest expense 166 183 191 727 933 Net financing revenue 98 142 151 605 626 Servicing fees (1) (2)
Slide 30: Corporate and Other - Condensed Income Statement
Supplemental Corporate and Other - Condensed Income Statement ($ millions) 4Q 10 3Q 10 4Q 09 FY 2010 FY 2009 Net financing expense $ (544) $ (553) $ (535) $ (2,099) $ (2,460) Gain on mortgage and automotive loans, net 1 - 7 1 -(Loss) gain on extinguishment of debt - (2) (2) (123) 661 Other income, n
Slide 31: Condensed Consolidated Balance Sheet
Supplemental Condensed Consolidated Balance Sheet Increase/(Decrease) vs. ($ millions) 12/31/10 9/30/10 12/31/09 9/30/10 12/31/09 Cash and cash equivalents $ 11,670 $ 12,589 $ 14,788 $ (919) $ (3,118) Trading securities 240 211 739 29 (499) Investment securities 14,846 11,925 12,158 2,921 2,688 Loan
Slide 32: Corporate and Other
Supplemental Corporate and Other • OID amortization from bond exchanges continues to be a key driver of results – Approximately $1 billion of OID amortization expense in 2011, with expense moderating significantly thereafter • Sale of Resort Finance business resulted in a recovery recognized through
Slide 33: Discontinued Operations
Supplemental Discontinued Operations • Ally made significant progress in 2010 streamlining operations • Venezuela auto finance business classified as discontinued in 4Q, resulting in a $108 million charge • Sold U.K. full servicing leasing business in 4Q Impact of Discontinued Operations, net of tax
Slide 34: High Quality Balance Sheet
Supplemental High Quality Balance Sheet Liquid Assets ($ millions) Total % of Total Comments Cash and Cash Equivalents $ 11,670 6.8% Conservative liquidity posture Investment and Trading Securities 15,086 8.8 26,756 15.6 Loan and Lease Assets Retail Auto 51,255 29.8 0.88% annualized credit losses Co
Slide 35: Global Auto Finance - Allowance Coverage Ratios
Supplemental Global Auto Finance - Allowance Coverage Ratios • North American consumer coverage ratio decreased primarily driven by a change in the asset mix as a result of continued runoff of liquidating portfolios and improved credit quality trends – Coverage ratio remains strong relative to charg
Slide 36: Mortgage Operations - Allowance Coverage Ratios
Supplemental Mortgage Operations - Allowance Coverage Ratios • HFI portfolio down from prior year driven by strategic actions taken in 2009 – Consumer coverage decline driven by the continued runoff of legacy assets • Commercial coverage down relative to prior periods as certain distressed assets ha
Slide 37: Supplemental Automotive Information
Supplemental Supplemental Automotive Information Sales Proceeds as % of ALG(1) (U.S. Lease Scheduled Terminations) 120% 110% 100% 90% 80% 70% Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2007 2008 2009 2010 (1) Estimated remarketing proceeds at time of lease origination Pre-Tax Income from Contin
Slide 38: Mortgage Operations Asset Breakout
Supplemental Mortgage Operations Asset Breakout • $5.3 billion of legacy assets remain at ResCap, consisting primarily of accounting assets and HFS loans marked at 45% of UPB Mortgage Operations Balance Sheet Analysis Origination and Legacy Total Total Servicing Portfolio 12/31/10 9/30/10 ResCap, LL
Slide 39: Ally Bank HFI Portfolio
Supplemental Ally Bank HFI Portfolio • Legacy assets running off with reinvestment in high quality prime jumbo originations • Delinquency trends continue to perform in line with expectations Mortgage Pool Characteristics - Ally Bank HFI Portfolio ($ billions) 12/31/2010 9/30/2010 12/31/2009 9/30/200
Slide 40: ResCap, LLC - Key Financial Information
Supplemental ResCap, LLC - Key Financial Information • ResCap met its covenants with tangible net worth of $846 million at the end of the fourth quarter ($ millions) 4Q 10 3Q 10 Net income $ 63 $ 38 ($ millions) 12/31/2010 9/30/2010 Cash & cash equivalents $ 672 $ 618 Mortgage loans held-for-sale 4,
Slide 41: Liquidity and Unsecured Debt Maturity Profile
Supplemental Liquidity and Unsecured Debt Maturity Profile Available Liquidity 12/31/2010 9/30/2010 ($ billions) Parent (1) Ally Bank Parent (1) Ally Bank Cash and Cash Equivalents $ 6.7 $ 3.1 $ 7.2 $ 4.1 Unencumbered Securities (2) 2.3 4.4 0.5 3.3 Current Committed Unused Capacity (3) 11.1 3.8 11.0
Slide 42: Ownership Structure
Supplemental Ownership Structure Common Ownership as of 9/30/2010 Common Ownership as of 12/31/10 GM GM GM 4.0% Trust GM 6.7% 5.9% Trust Other 9.9% 8.5% Ceberus U.S. U.S. Other 12.2% 7.8% Treasury Treasury 56.3% 73.8% Cerberus 14.9% Other Tier 1 Capital as of 12/31/10 ($ millions) Liquidation Series
Slide 43: Notes on Non-GAAP Financial Measures and Other
Supplemental Notes on Non-GAAP Financial Measures and Other Slide 3 • Non-core operations sold in 2010 include: auto finance operations in Argentina, Australia, New Zealand, and Poland; full-service leasing operations in Australia, Belgium, France, Poland and the U.K.; European mortgage operations;