Ally Financial Inc. · NYSE:ALLY
Ally Financial — Q3 2024 Earnings Presentation
36 slides from Ally Financial's earnings presentation, Oct 18, 2024
Slide 1: Ally Financial Inc. 3Q 2024 Earnings Review
Ally Financial Inc. 3Q 2024 Earnings Review October 18, 2024 Contact Ally Investor Relations at (866) 710-4623 or investor.relations@ally.com
Slide 2: Forward-Looking Statements and Additional Information
3Q 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
3Q 2024 Preliminary Results GAAP and Core Results: Quarterly Quarterly Trend ($ millions, except per share data) 3Q 24 2Q 24 1Q 24 4Q 23 3Q 23 GAAP net income attributable to common shareholders (NIAC) $ 330 $ 266 $ 129 $ 49 $ 269 Core net income attributable to common shareholders (1)(2) $ 295 $ 29
Slide 4: Quarterly Highlights
3Q 2024 Preliminary Results 3Q 2024 Quarterly Highlights Financial Highlights $1.06 $233M 11.0% $2.1B 3.25% GAAP Net GAAP EPS GAAP Pre-tax Return on Equity NIM ex. OID(2) Revenue $0.95 $188M 13.1% $2.1B 9.8% Adj. Net Adjusted EPS(1) Core Pre-tax(1) Core ROTCE(1) CET1 Revenue(1) Key Messages Strong u
Slide 5: Market Leading Franchises
3Q 2024 Preliminary Results Market Leading Franchises A culture of customer obsession driven by a ‘Do It Right’ approach Leading dealer financial services platform Largest, all-digital, direct US bank Auto Finance Deposits & Invest(1) Consumer Auto Applications Primary Deposit Customers $9.4B 3.6M $
Slide 6: Consolidated Income Statement - Quarterly Results
3Q 2024 Preliminary Results 3Q 2024 Financial Results Consolidated Income Statement - Quarterly Results Increase / (Decrease) vs. ($ millions; except per share data) 3Q 24 2Q 24 3Q 23 2Q 24 3Q 23 Net financing revenue $ 1,488 $ 1,495 $ 1,533 $ (7) $ (45) Core OID (1) 14 14 12 1 2 Net financing reven
Slide 7: Balance Sheet and Net Interest Margin
3Q 2024 Preliminary Results Balance Sheet and Net Interest Margin 3Q '24 2Q '24 3Q '23 Average Average Average Balance Yield Balance Yield Balance Yield Retail Auto Loans (ex. hedge) $ 83,574 8.99% $ 83,427 8.86% $ 85,131 8.16% Memo: Impact from hedges 0.30% 0.33% 0.74% Retail Auto Loans (inc. hedge
Slide 8: Net Interest Margin Dynamics
3Q 2024 Preliminary Results Net Interest Margin Dynamics Balance sheet well-positioned for NIM expansion over time • Fundamentals continue to support medium-term path to 4% NIM • Asset sensitive in near-term as floating rate assets and hedges reprice faster than deposits • Liability sensitive in med
Slide 9: Capital
3Q 2024 Preliminary Results Capital • 3Q‘24 CET1 ratio of 9.8% and TCE / TA ratio of 6.1%(1) Capital Ratios and Risk-Weighted Assets ($ billions) Total Capital • $4.2B of CET1 capital above new FRB requirement of 7.1% 12.5% 12.4% 12.5% 12.7% 12.9% Ratio (Regulatory Minimum + SCB) 11.0% 11.2% Tier 1
Slide 10: Asset Quality: Key Metrics
3Q 2024 Preliminary Results Asset Quality: Key Metrics Consolidated Net Charge-Offs (NCOs)(1) Net Charge-Off Activity(1) ($ millions) 3Q 23 4Q 23 1Q 24 2Q 24 3Q 24 1.77% Retail Auto $ 393 $ 470 $ 477 $ 378 $ 467 1.55% 1.50% Annualized NCO Rate Commercial Auto - 19 1 (4) - 1.31% 1.26% $623 Mortgage F
Slide 11: Asset Quality: Coverage and Reserves
3Q 2024 Preliminary Results Asset Quality: Coverage and Reserves • Retail auto coverage rate of 3.80% and consolidated coverage of 2.69% – Retail auto and consolidated coverage rates up 15bps and 12bps, respectively, versus prior quarter – Retail auto coverage reflects more gradual pace of improveme
Slide 12: Retail Auto Underwriting Actions
3Q 2024 Preliminary Results Retail Auto Underwriting Actions Continued curtailment of underperforming segments, including significant shift in tier mix in 2023 • Ongoing curtailment actions to prioritize risk-adjusted returns • Targeted microsegment actions balance risk mitigation with return enhanc
Slide 13: Retail Auto Vintage Credit Trends
3Q 2024 Preliminary Results Retail Auto Vintage Credit Trends Underwriting actions driving higher-quality mix and improving credit performance; auction price stability expected to drive improved severity on recent vintages Retail Auto Originations $12.4 Higher credit quality vintages reach peak loss
Slide 14: Auto Finance
3Q 2024 Preliminary Results Auto Finance • Auto pre-tax income of $175 million Increase / (Decrease) vs. Key Financials ($ millions) 3Q 24 2Q 24 3Q 23 – Pre-tax income down YoY, driven by higher retail auto Net financing revenue $ 1,285 $ (29) $ (75) net charge-offs and loss reserves Total other rev
Slide 15: Electric Vehicle Originations Summary
3Q 2024 Preliminary Results Electric Vehicle Originations Summary Continued momentum in electric vehicle lease contracts • Consumer EV originations of $1.1B in 3Q; $727M of lease Lease EV Originations by Vehicle Type • Virtually all battery electric lease contracts include $727M $639M residual guara
Slide 16: Insurance
3Q 2024 Preliminary Results Insurance • Insurance pre-tax income of $102 million and Increase / (Decrease) vs. core pre-tax income of $46 million(1) Key Financials ($ millions) 3Q 24 2Q 24 3Q 23 Premiums, service revenue earned and other income $ 362 $ 18 $ 38 – $362 million of earned premiums, up $
Slide 17: Corporate Finance
3Q 2024 Preliminary Results Corporate Finance Increase/(Decrease) vs. • Corporate Finance pre-tax income of $95 million Key Financials ($ millions) 3Q 24 2Q 24 3Q 23 – Net financing revenue up YoY reflecting higher income Net financing revenue $ 101 $ (3) $ 4 Other revenue 37 7 13 spreads and fees f
Slide 18: Mortgage Finance
3Q 2024 Preliminary Results Mortgage Finance Increase/(Decrease) vs. • Mortgage pre-tax income of $27 million Key Financials ($ millions) 3Q 24 2Q 24 3Q 23 Net financing revenue $ 52 $ (1) $ (1) • Direct-to-Consumer (DTC) originations of $256 Total other revenue 6 1 2 million, reflective of current
Slide 19: Financial Outlook
3Q 2024 Preliminary Results Financial Outlook 2024 Full-Year Outlook Net Interest Margin ~3.20% Adjusted Other Revenue(1) ↑ 12% YoY Retail Auto NCO 2.25% - 2.30% Consolidated NCO 1.50% - 1.55% Adjusted Noninterest Expense(1) Controllable(2) ↓>1% YoY Total ↑ less than 2% YoY Average Earning Assets ↓
Slide 20: CEO Perspectives
3Q 2024 Preliminary Results CEO Perspectives Well-positioned for earnings expansion to deliver mid-teens ROTCE over medium-term Strong underlying trends in core franchises Net interest margin expansion from structural tailwinds Strong momentum in diversified fee revenue from Insurance & Auto Curtail
Slide 21: Supplemental
Supplemental ally do it right.
Slide 22: Results By Segment
Supplemental 3Q 2024 Preliminary Results Results By Segment Results by Segment and GAAP to Core Pre-tax income Walk Increase/(Decrease) vs. ($ millions) 3Q 24 2Q 24 3Q 23 2Q 24 3Q 23 Automotive Finance $ 175 $ 407 $ 377 $ (232) $ (202) Insurance 102 (42) (16) 144 118 Dealer Financial Services $ 277
Slide 23: Corporate and Other
Supplemental 3Q 2024 Preliminary Results Corporate and Other Corporate & Other Results • Pre-tax loss of $166 million and Core pre-tax loss ($ millions) Increase/(Decrease) vs. of $154 million(1) Key Financials 3Q 24 2Q 24 3Q 23 Net financing revenue $ 19 $ 25 $ 25 – Net financing revenue higher YoY
Slide 24: Funding and Liquidity
Supplemental 3Q 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 25: Interest Rate Risk
Supplemental 3Q 2024 Preliminary Results Interest Rate Risk Net Financing Revenue Sensitivity Analysis(1) ($ millions) 3Q 24 2Q 24 ($ millions) Gradual (2) Instantaneous Gradual (2) Instantaneous -100 bp $ (54) $ (152) $ (67) $ (17) +100 bp $ 47 $ (94) $ 46 $ (38) Stable rate environment n/m $ 82 n/
Slide 26: Notes on Non-GAAP Financial Measures
Supplemental 3Q 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 27: Notes on Non-GAAP Financial Measures
Supplemental 3Q 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 28: Notes on Non-GAAP Financial Measures
Supplemental 3Q 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 29: Notes on Other Financial Measures
Supplemental 3Q 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 30: Additional Notes
Supplemental 3Q 2024 Preliminary Results Additional Notes Page – 5 | Market Leading Franchises (1) Deposits and Invest, and Other Consumer Lending Products activity is within ‘Corporate and Other’ segment. (2) Estimated Retail Auto Originated Yield is a forward-looking financial measure. See page 29
Slide 31: Additional Notes
Supplemental 3Q 2024 Preliminary Results Additional Notes Page – 23 | Corporate and Other (2) Repositioning and other are primarily related to the extinguishment of high-cost legacy debt, strategic activities, restructuring, and significant other one-time items, as applicable for respective periods
Slide 32: GAAP to Core Results: Adjusted EPS
Supplemental 3Q 2024 Preliminary Results GAAP to Core Results: Adjusted EPS Adjusted Earnings per Share ("Adjusted EPS") QUARTERLY TREND 3Q 24 2Q 24 1Q 24 4Q 23 3Q 23 Numerator ($ millions) GAAP net income attributable to common shareholders $ 330 $ 266 $ 129 $ 49 $ 269 Discontinued operations, net
Slide 33: GAAP to Core Results: Core ROTCE
Supplemental 3Q 2024 Preliminary Results GAAP to Core Results: Core ROTCE Core Return on Tangible Common Equity ("Core ROTCE") QUARTERLY TREND 3Q 24 2Q 24 1Q 24 4Q 23 3Q 23 Numerator ($ millions) GAAP net income attributable to common shareholders $ 330 $ 266 $ 129 $ 49 $ 269 Discontinued operations
Slide 34: GAAP to Core Results: Adjusted TBVPS
Supplemental 3Q 2024 Preliminary Results GAAP to Core Results: Adjusted TBVPS Adjusted Tangible Book Value per Share ("Adjusted TBVPS") QUARTERLY TREND 3Q 24 2Q 24 1Q 24 4Q 23 3Q 23 Numerator ($ billions) GAAP shareholder's equity $ 14.7 $ 13.9 $ 13.7 $ 13.8 $ 12.8 less: Preferred equity (2.3) (2.3)
Slide 35: GAAP to Core Results: Adjusted Efficiency Ratio
Supplemental 3Q 2024 Preliminary Results GAAP to Core Results: Adjusted Efficiency Ratio Adjusted Efficiency Ratio QUARTERLY TREND 3Q 24 2Q 24 1Q 24 4Q 23 3Q 23 Numerator ($ millions) GAAP noninterest expense $ 1,225 $ 1,286 $ 1,308 $ 1,416 $ 1,232 Insurance expense (366) (410) (343) (321) (338) Rep
Slide 36: Non-GAAP Reconciliations
Supplemental 3Q 2024 Preliminary Results Non-GAAP Reconciliations ($ millions) QUARTERLY TREND Net Financing Revenue (ex. Core OID) 3Q 24 2Q 24 1Q 24 4Q 23 3Q 23 GAAP Net Financing Revenue $ 1,488 $ 1,495 $ 1,456 $ 1,493 $ 1,533 Core OID 14 14 13 13 12 Net Financing Revenue (ex. Core OID) [a] $ 1,50