Ally Financial Inc. · NYSE:ALLY
Ally Financial — Q2 2024 Earnings Presentation
37 slides from Ally Financial's earnings presentation, Jul 17, 2024
Slide 1: 2Q 2024 Earnings Review
Ally Financial Inc. 2Q 2024 Earnings Review July 17, 2024 Contact Ally Investor Relations at (866) 710-4623 or investor.relations@ally.com
Slide 2: Forward-Looking Statements and Additional Information
2Q 2024 Preliminary Results 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 C
Slide 3: GAAP and Core Results: Quarterly
2Q 2024 Preliminary Results GAAP and Core Results: Quarterly Quarterly Trend ($ millions, except per share data) 2Q 24 1Q 24 4Q 23 3Q 23 2Q 23 GAAP net income attributable to common shareholders (NIAC) $ 266 $ 129 $ 49 $ 269 $ 301 Core net income attributable to common shareholders (1)(2) $ 299 $ 13
Slide 4: Purpose-Driven Culture
2Q 2024 Preliminary Results Purpose-Driven Culture Powered by our “LEAD” core values and “Do it Right” approach L ook externally E xecute with excellence A ct with professionalism D eliver results Customers Communities Employees “Do It Right” culture of Impact the communities Invest in our people an
Slide 5: Dealer Financial Services
2Q 2024 Preliminary Results Dealer Financial Services Comprehensive product suite with high-tech, high-touch approach Auto Finance Insurance Consumer Lending Commercial Lending SmartAuction & Commercial P&C Consumer F&I Retail, Lease, Floorplan, Dealer Passthrough Inventory insurance, VSC, GAP and o
Slide 6: Ally Bank
2Q 2024 Preliminary Results Ally Bank Largest, all-digital, direct U.S. bank with market leading deposits franchise Deposits Customers Deposits | Engaged(5) 1.2M 938K “Best Online Bank” list by MONEY® Magazine(1) 649K 3.2M Deposit customers | 96% customer retention(2) 63K 79K 129K $142.1B Retail dep
Slide 7: 2Q 2024 Quarterly Highlights
2Q 2024 Preliminary Results 2Q 2024 Quarterly Highlights $0.86 | $0.97 9.3% | 14.0% $2.0B | $2.0B 3.30% | 10.59% GAAP Adjusted Return on Core GAAP Adj. Total NIM Est. Retail EPS EPS(1) Common Equity RoTCE(1) Net Revenue Net Revenue(1) (ex. OID)(2) Originated Yield(3) 2Q Financial Highlights • Strong
Slide 8: Consolidated Income Statement - Quarterly Results
2Q 2024 Preliminary Results 2Q 2024 Financial Results Consolidated Income Statement - Quarterly Results Increase / (Decrease) vs. ($ millions; except per share data) 2Q 24 1Q 24 2Q 23 1Q 24 2Q 23 Net financing revenue $ 1,495 $ 1,456 $ 1,573 $ 39 $ (78) Core OID (1) 14 13 12 1 2 Net financing revenu
Slide 9: Balance Sheet and Net Interest Margin
2Q 2024 Preliminary Results Balance Sheet and Net Interest Margin 2Q '24 1Q '24 2Q '23 Average Average Average Balance Yield Balance Yield Balance Yield Retail Auto Loans (ex. hedge) $ 83,427 8.86% $ 84,056 8.65% $ 84,097 7.87% Memo: Impact from hedges 0.33% 0.42% 0.94% Retail Auto Loans (inc. hedge
Slide 10: Diversified Consumer Deposits Franchise
2Q 2024 Preliminary Results Diversified Consumer Deposits Franchise 15-year journey establishing ‘a brand that matters’ Ally Retail Deposits by Vintage $ in billions $160 $140 $120 $100 $80 $60 $40 $20 - Pre-2009 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Custome
Slide 11: Capital
2Q 2024 Preliminary Results Capital • 2Q ‘24 CET1 ratio of 9.6% and TCE / TA ratio of 5.6%(1) Capital Ratios and Risk-Weighted Assets ($ billions) • $4B of CET1 capital above FRB requirement of 7.0% Total Capital (Regulatory Minimum + SCB) 12.5% 12.5% 12.4% 12.5% 12.7% Ratio 10.7% 10.7% 10.8% 10.8%
Slide 12: Capital Optimization
2Q 2024 Preliminary Results Capital Optimization Long history and experience in securitization, established infrastructure and technology enabled the successful issuance of Ally’s inaugural credit risk transfer transaction Generates 11bps of CET 1 benefit in 2Q and introduces another lever for capit
Slide 13: Asset Quality: Key Metrics
2Q 2024 Preliminary Results Asset Quality: Key Metrics Consolidated Net Charge-Offs (NCOs)(1) Net Charge-Off Activity(1) ($ millions) 2Q 23 3Q 23 4Q 23 1Q 24 2Q 24 1.77% 1.55% Retail Auto $ 277 $ 393 $ 470 $ 477 $ 378 Commercial Auto 4 - 19 1 (4) 1.31% 1.26% Annualized 1.16% $623 NCO Rate Mortgage F
Slide 14: Asset Quality: Coverage and Reserves
2Q 2024 Preliminary Results Asset Quality: Coverage and Reserves • Retail auto coverage rate of 3.65% and consolidated coverage rate of 2.57% – Consolidated coverage and Retail Auto coverage rates flat QoQ; no change to overall macroeconomic outlook • Retail auto coverage levels ~30 basis points hig
Slide 15: Retail Auto Credit Vintage Dynamics
2Q 2024 Preliminary Results Retail Auto Credit Vintage Dynamics Peak loss timing of 2022 vintage is key driver of 1H 2024 net charge-offs • 2Q Retail NCO rate of 1.81%, in-line with recent guidance • Front-book performing in line with expectations while back-book continues to pressure near-term NCOs
Slide 16: EV Originations and Tax Rate Impact
2Q 2024 Preliminary Results EV Originations and Tax Rate Impact Recent momentum in electric vehicle lease contracts Consumer Auto EV Originations by Product Lease EV Originations by Vehicle Type $1,005M Virtually all battery electric lease $639M contracts include residual guarantees Retail $722M 25%
Slide 17: Auto Finance
2Q 2024 Preliminary Results Auto Finance • Auto pre-tax income of $407 million Increase / (Decrease) vs. – Pre-tax income down YoY, driven by elevated credit losses from Key Financials ($ millions) 2Q 24 1Q 24 2Q 23 back-book performance and higher noninterest expense Net financing revenue $ 1,314 $
Slide 18: Insurance
2Q 2024 Preliminary Results Insurance • Insurance pre-tax loss of $42 million and core Increase / (Decrease) vs. pre-tax loss of $14 million(1) Key Financials ($ millions) 2Q 24 1Q 24 2Q 23 Premiums, service revenue earned and other income $ 344 $ (5) $ 32 – $344 million of earned premiums, up $32 m
Slide 19: Corporate Finance
2Q 2024 Preliminary Results Corporate Finance • Corporate Finance pre-tax income of $98 million Increase/(Decrease) vs. Key Financials ($ millions) 2Q 24 1Q 24 2Q 23 – Net financing revenue up YoY reflecting higher income spreads Net financing revenue $ 104 $ (7) $ 12 and elevated fees from loan pay
Slide 20: Mortgage Finance
2Q 2024 Preliminary Results Mortgage Finance • Mortgage pre-tax income of $27 million Increase/(Decrease) vs. Key Financials ($ millions) 2Q 24 1Q 24 2Q 23 – Noninterest expense down $5 million YoY, reflecting Net financing revenue $ 53 $ 1 $ - the benefit of variable cost structure Total other reve
Slide 21: Full-Year 2024 Financial Outlook
2Q 2024 Preliminary Results Full-Year 2024 Financial Outlook Current Guide Prior Guide (1Q24) Net Interest Margin ~3.30% 3.25% - 3.30% Exit rate 3.45% - 3.50% Exit rate 3.40% - 3.50% Adj. Other Revenue(1) ↑ 12% YoY ↑ 9% - 12% YoY Retail Auto NCO ~2.1% ~2.0% Consolidated NCO 1.45% - 1.50% 1.40% - 1.5
Slide 22: Supplemental
Supplemental ally do it right.
Slide 23: Results By Segment
Supplemental 2Q 2024 Preliminary Results Results By Segment Results by Segment and GAAP to Core Pre-tax income Walk Increase/(Decrease) vs. ($ millions) 2Q 24 1Q 24 2Q 23 1Q 24 2Q 23 Automotive Finance $ 407 $ 322 $ 501 $ 85 $ (94) Insurance (42) 70 8 (112) (50) Dealer Financial Services $ 365 $ 392
Slide 24: Corporate and Other
Supplemental 2Q 2024 Preliminary Results Corporate and Other • Pre-tax loss of $233 million and Core pre-tax loss Corporate & Other Results of $218 million(1) ($ millions) Increase/(Decrease) vs. Key Financials 2Q 24 1Q 24 2Q 23 – Net financing revenue lower YoY driven by higher interest Net financi
Slide 25: Funding and Liquidity
Supplemental 2Q 2024 Preliminary Results Funding and Liquidity Core funded with stable deposits and strong liquidity position Funding Composition Total Available Liquidity (End of Period) ($ billions) Unsecured Debt Cash and Equivalents FHLB / Other FHLB Unused Pledged Borrowing Capacity Secured Deb
Slide 26: Interest Rate Risk
Supplemental 2Q 2024 Preliminary Results Interest Rate Risk Net Financing Revenue Sensitivity Analysis(1) ($ millions) 2Q 24 1Q 24 ($ millions) Gradual (2) Instantaneous Gradual (2) Instantaneous -100 bp $ (67) $ (17) $ (87) $ (56) +100 bp $ 46 $ (38) $ 71 $ 5 Stable rate environment n/m $ 56 n/m $
Slide 27: Notes on Non-GAAP Financial Measures
Supplemental 2Q 2024 Preliminary Results Notes on Non-GAAP 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: Accelerated issu
Slide 28: Notes on Non-GAAP Financial Measures
Supplemental 2Q 2024 Preliminary Results Notes on Non-GAAP Financial Measures 7) Adjusted tangible book value per share (Adjusted TBVPS) is a non-GAAP financial measure that reflects the book value of equity attributable to shareholders even if Core OID balance were accelerated immediately through t
Slide 29: Notes on Non-GAAP Financial Measures
Supplemental 2Q 2024 Preliminary Results Notes on Non-GAAP Financial Measures 13) Core return on tangible common equity (Core ROTCE) is a non-GAAP financial measure that management believes is helpful for readers to better understand the ongoing ability of the company to generate returns on its equi
Slide 30: Notes on Other Financial Measures
Supplemental 2Q 2024 Preliminary Results Notes on Other Financial Measures 1) Change in fair value of equity securities impacts the Insurance, Corporate Finance and Corporate and Other segments. The change reflects fair value adjustments to equity securities that are reported at fair value. Manageme
Slide 31: Additional Notes
Supplemental 2Q 2024 Preliminary Results Additional Notes Page – 5 | Dealer Financial Services (1) ‘Largest bank auto finance franchise in the U.S.’ by consumer assets outstanding at year-end 2023. Source: 2024 Big Wheels Auto Finance Survey. (2) Originated spread is calculated as estimated retail a
Slide 32: Additional Notes
Supplemental 2Q 2024 Preliminary Results Additional Notes Page – 23 | Results by Segment (2) Change in fair value of equity securities impacts the Insurance, Corporate Finance and Corporate and Other segments. The change reflects fair value adjustments to equity securities that are reported at fair
Slide 33: GAAP to Core Results: Adjusted EPS
Supplemental 2Q 2024 Preliminary Results GAAP to Core Results: Adjusted EPS Adjusted Earnings per Share ("Adjusted EPS") QUARTERLY TREND 2Q 24 1Q 24 4Q 23 3Q 23 2Q 23 Numerator ($ millions) GAAP net income attributable to common shareholders $ 266 $ 129 $ 49 $ 269 $ 301 Discontinued operations, net
Slide 34: GAAP to Core Results: Core ROTCE
Supplemental 2Q 2024 Preliminary Results GAAP to Core Results: Core ROTCE Core Return on Tangible Common Equity ("Core ROTCE") QUARTERLY TREND 2Q 24 1Q 24 4Q 23 3Q 23 2Q 23 Numerator ($ millions) GAAP net income attributable to common shareholders $ 266 $ 129 $ 49 $ 269 $ 301 Discontinued operations
Slide 35: GAAP to Core Results: Adjusted TBVPS
Supplemental 2Q 2024 Preliminary Results GAAP to Core Results: Adjusted TBVPS Adjusted Tangible Book Value per Share ("Adjusted TBVPS") QUARTERLY TREND 2Q 24 1Q 24 4Q 23 3Q 23 2Q 23 Numerator ($ billions) GAAP shareholder's equity $ 13.9 $ 13.7 $ 13.8 $ 12.8 $ 13.5 less: Preferred equity (2.3) (2.3)
Slide 36: GAAP to Core Results: Adjusted Efficiency Ratio
Supplemental 2Q 2024 Preliminary Results GAAP to Core Results: Adjusted Efficiency Ratio Adjusted Efficiency Ratio QUARTERLY TREND 2Q 24 1Q 24 4Q 23 3Q 23 2Q 23 Numerator ($ millions) GAAP noninterest expense $ 1,286 $ 1,308 $ 1,416 $ 1,232 $ 1,249 Insurance expense (410) (343) (321) (338) (358) Rep
Slide 37: Non-GAAP Reconciliations
Supplemental 2Q 2024 Preliminary Results Non-GAAP Reconciliations ($ millions) QUARTERLY TREND Net Financing Revenue (ex. Core OID) 2Q 24 1Q 24 4Q 23 3Q 23 2Q 23 GAAP Net Financing Revenue $ 1,495 $ 1,456 $ 1,493 $ 1,533 $ 1,573 Core OID 14 13 13 12 12 Net Financing Revenue (ex. Core OID) [a] $ 1,50