Ally Financial Inc. · NYSE:ALLY
Ally Financial — Q3 2022 Earnings Presentation
39 slides from Ally Financial's earnings presentation, Oct 19, 2022
Slide 1: Ally Financial Inc. 3Q 2022 Earnings Review
3Q 2022 Preliminary Results Ally Financial Inc. 3Q 2022 Earnings Review October 19, 2022 Contact Ally Investor Relations at (866) 710-4623 or investor.relations@ally.com 1
Slide 2: Forward-Looking Statements and Additional Information
3Q 2022 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 & Core Results: Quarterly
3Q 2022 Preliminary Results GAAP & Core Results: Quarterly ($ millions, except per share data) 3Q 22 2Q 22 1Q 22 4Q 21 3Q 21 GAAP net income attributable to common shareholders (NIAC) $ 272 $ 454 $ 627 $ 624 $ 683 Core net income attributable to common shareholders (1)(2) $ 346 $ 570 $ 687 $ 705 $ 7
Slide 4: 3Q 2022 Financial Results
3Q 2022 Preliminary Results 3Q 2022 Financial Results Focused Execution Leading, Growing Businesses Durable Returns $1.12 17.2% $2.1B 9.3% Adjusted Core Adjusted Total CET1 EPS(1) ROTCE(1) Net Revenue(1) Capital Ratio Notable Items within the Quarter • $133M of reserve build to support profitable lo
Slide 5: 3Q 2022 Operational Highlights
3Q 2022 Preliminary Results 3Q 2022 Operational Highlights Solid operating performance across established and growing businesses Auto & Insurance • Consumer auto originations of $12.3B | Strong underwriting & risk management capabilities supporting profitable asset growth 1 • 8.75% estimated retail
Slide 6: Consumer Saving and Spending Trends
3Q 2022 Preliminary Results Consumer Saving and Spending Trends Consumers remain healthy despite persistent inflation • Average savings balances across income segments are up ~30% compared to March 2020 – Elevated tax outflows in 2Q driving temporary decrease in balance • Consumers spending remains
Slide 7: 3Q 2022 Financial Results
3Q 2022 Preliminary Results 3Q 2022 Financial Results Inc / (Dec) v. Consolidated Income Statement 3Q 22 2Q 22 3Q 21 2Q 22 3Q 21 ($ millions, except per share data) Net financing revenue (ex. Core OID) (1) $ 1,730 $ 1,774 $ 1,603 $ (45) $ 126 Core OID (1) (11) (10) (9) (0) (1) Net financing revenue
Slide 8: Balance Sheet & Net Interest Margin
3Q 2022 Preliminary Results Balance Sheet & Net Interest Margin 3Q 22 2Q 22 3Q 21 Average Average Average Balance Yield Balance Yield Balance Yield ($ millions) Retail Auto Loan $ 82,362 7.29% $ 79,695 6.82% $ 76,557 6.62% Retail Auto Loan (ex. hedge impact) 7.04% 6.85% 6.84% Auto Lease (net of depr
Slide 9: Net Interest Margin Dynamics
3Q 2022 Preliminary Results Net Interest Margin Dynamics NIM projected to reach +/- 3.5% as Fed Funds peaks • Rapidly rising rates and liability sensitive balance sheet creating near term NIM compression • Two largest portfolios respond differently to changes in benchmark rates – Retail Auto: Fixed
Slide 10: Capital
3Q 2022 Preliminary Results Capital • 3Q 2022 CET1 ratio of 9.3% Capital Ratios and Risk-Weighted Assets • Strong commitment to driving shareholder value – Organic loan expansion driving long-term, sustainable returns – Executed $415 million of repurchases in 3Q (~$1.6B YTD) Total Capital Ratio – An
Slide 11: Asset Quality: Key Metrics
3Q 2022 Preliminary Results Asset Quality: Key Metrics Consolidated Net Charge-Offs (NCOs) Net Charge-Off Activity ($ millions) 3Q 19 3Q 21 4Q 21 1Q 22 2Q 22 3Q 22 Retail Auto $ 253 $ 51 $ 94 $ 113 $ 108 $ 217 Annualized NCO Rate Commercial Auto 1 - - (1) (1) - Mortgage Finance - - - - (1) 1 Corpora
Slide 12: Asset Quality: Retail Auto Credit Normalization
3Q 2022 Preliminary Results Asset Quality: Retail Auto Credit Normalization • Auto portfolio today reflects slightly higher loss content and materially higher risk-adjusted yields • Given strategic shift to prime & used, net charge-offs are expected to migrate to 1.6%, ↑30 bps vs. 2019 • Normalized
Slide 13: Asset Quality: Coverage & Reserves
3Q 2022 Preliminary Results Asset Quality: Coverage & Reserves Consolidated Coverage Retail Auto Coverage Includes 2bps ($ billions) ($ billions) from Hurricane Ian Reserve (%) Reserve (%) Reserve ($) Reserve ($) Note: Coverage rate calculations exclude fair value adjustment for loans in hedge accou
Slide 14: Ally Bank: Deposit & Customer Trends
3Q 2022 Preliminary Results Ally Bank: Deposit & Customer Trends • Total deposits of $146 billion, up $6.3 billion YoY Total Deposits: Retail & Brokered – Retail deposits of $133.9 billion, up $2.7 billion QoQ; up $2.3 ($ billions; EoP) billion YoY Industry Leading 96% Customer Retention Rate – Cons
Slide 15: Ally Bank: Leading, Growing & Diversified
3Q 2022 Preliminary Results Ally Bank: Leading, Growing & Diversified #1 2.6M 54 $134B 13+ Largest All-Digital, Ally Bank Consecutive Quarters Retail Deposit Consecutive Years of Direct U.S. Bank(1) Deposit Customers of Customer Growth Balances Retail Deposit Growth • Leading, all-digital direct ban
Slide 16: Auto Finance
3Q 2022 Preliminary Results Auto Finance • Auto pre-tax income of $488 million Inc / (Dec) v. Key Financials ($ millions) 3Q 22 2Q 22 3Q 21 – Pre-tax income, down QoQ and YoY, primarily driven by higher Net financing revenue $ 1,303 $ 2 $ (26) provision for credit losses from robust consumer origina
Slide 17: Auto Finance: Agile Market Leader
3Q 2022 Preliminary Results Auto Finance: Agile Market Leader #1 #1 #1 #1 Leading Prime Auto Bank Floorplan Bank Retail Auto Dealer Satisfaction Insurance Provider Lender(1) Lender(2) Loan Outstandings(3) J.D. Power Award(4) (F&I, P&C Products) Dealer Relationships & Consumer Applications Auto Balan
Slide 18: Insurance
3Q 2022 Preliminary Results Insurance Inc / (Dec) v. • Insurance pre-tax loss of $30 million and core pre-tax Key Financials ($ millions) 3Q 22 2Q 22 3Q 21 income of $32 million Premiums, service revenue earned and other $ 292 $ 7 $ 10 VSC Losses 35 (3) 2 – $292 million of earned premiums demonstrat
Slide 19: Corporate Finance
3Q 2022 Preliminary Results Corporate Finance • Corporate Finance pre-tax income of $91 million Inc / (Dec) v. Key Financials ($ millions) 3Q 22 2Q 22 3Q 21 – Net financing revenue up YoY and QoQ reflecting higher asset Net financing revenue $ 80 $ 3 $ 3 balances (1) Adjusted total other revenue 54
Slide 20: Mortgage Finance
3Q 2022 Preliminary Results Mortgage Finance Inc / (Dec) v. • Mortgage pre-tax income of $19 million Key Financials ($ millions) 3Q 22 2Q 22 3Q 21 – Net financing revenue, up $21 million YoY, reflecting growth in Net financing revenue $ 57 $ 1 $ 21 asset balances Total other revenue 7 3 (12) – Other
Slide 21: Navigating a Challenging Environment
3Q 2022 Preliminary Results Navigating a Challenging Environment Delivering solid operating performance while preparing for continued volatility ↑ 475bps ↓11% ↓1% Backdrop Macro Expected Fed Funds increase Vehicle Sales vs. 2019 YTD Industry Total Most since 1980 New and Used Deposit Growth Ally Ori
Slide 22: Strategic Priorities
3Q 2022 Preliminary Results Strategic Priorities ‘Do It Right’ Purpose-Driven Culture Optimizing leading Auto, Insurance & Ally Bank products & platforms Engaging customers with newer products across scalable platforms Differentiating through deep expertise & digital-first capabilities Driving disci
Slide 23: Supplemental
3Q 2022 Preliminary Results Supplemental 23
Slide 24: Results by Segment
Supplemental 3Q 2022 Preliminary Results Results by Segment Core pre-tax income Walk Inc / (Dec) v. ($ millions) Segment Detail 3Q 22 2Q 22 3Q 21 2Q 22 3Q 21 Automotive Finance $ 488 $ 600 $ 825 $ (112) $ (337) Insurance (30) (122) 24 92 (54) Dealer Financial Services $ 458 $ 478 $ 849 $ (20) $ (391
Slide 25: Funding Profile Details
Supplemental 3Q 2022 Preliminary Results Funding Profile Details Funding Mix Deposit Mix Unsecured FHLB / Other Brokered / Other Secured Retail CD Deposits MMA/OSA/ Checking Note: Totals may not foot due to rounding. Note: Other includes sweep deposits, mortgage escrow and other deposits. Totals may
Slide 26: Corporate and Other
Supplemental 3Q 2022 Preliminary Results Corporate and Other ($ millions) Inc / (Dec) v. • Pre-tax loss of $151 million, Core pre-tax loss of $120 Key Financials 3Q 22 2Q 22 3Q 21 million, primarily driven by unrealized loss on Net financing revenue $ 255 $ (55) $ 117 nonmarketable equity investment
Slide 27: Interest Rate Risk and Hedging
Supplemental 3Q 2022 Preliminary Results Interest Rate Risk and Hedging Net Financing Revenue Sensitivity Analysis (1) ($ millions) 3Q 22 2Q 22 Change in interest rates Gradual (2) Instantaneous Gradual (2) Instantaneous -100 bps $ 7 $ 95 $ (25) $ 73 +100 bps $ (3) $ (99) $ 26 $ (79) Stable rate env
Slide 28: Deferred Tax Asset
Supplemental 3Q 2022 Preliminary Results Deferred Tax Asset Deferred Tax Asset 3Q 22(1) 2Q 22 Gross DTA Valuation Net DTA Net DTA Balance Allowance Balance Balance Net Operating Loss (Federal) $ 620 $ - $ 620 $ 516 Tax Credit Carryforwards 1,179 (754) 425 394 State/Local Tax Carryforwards 324 (140)
Slide 29: Notes on Non-GAAP Financial Measures
Supplemental 3Q 2022 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: Adjusted Earni
Slide 30: Notes on Non-GAAP Financial Measures
Supplemental 3Q 2022 Preliminary Results Notes on Non-GAAP Financial Measures 6) Core outstanding original issue discount balance (Core OID balance) is a non-GAAP financial measure for outstanding OID and is believed by management to help the reader better understand the balance removed from Core RO
Slide 31: Notes on Other Financial Measures
Supplemental 3Q 2022 Preliminary Results Notes on Other Financial Measures 1) Estimated Retail Auto Originated Yield is a forward-looking non-GAAP financial measure determined by calculating the estimated average annualized yield for loans originated during the period. At this time there currently i
Slide 32: Additional Notes
Supplemental 3Q 2022 Preliminary Results Additional Notes Page – 15 | Ally Bank: Leading, Growing & Diversified (1) Source: FDIC, FFIEC Call Reports and Company filings of branchless banks including Marcus, Discover, American Express, Synchrony. Page – 16 | Auto Finance (1) Noninterest expense inclu
Slide 33: Additional Notes
Supplemental 3Q 2022 Preliminary Results Additional Notes Page – 24 | Results by Segment (2) Change in fair value of equity securities impacts the Insurance, Corporate Finance and Corp/Other segments. Reflects equity fair value adjustments related to ASU 2016-01 which requires change in the fair val
Slide 34: GAAP to Core Results: Adjusted EPS
Supplemental 3Q 2022 Preliminary Results GAAP to Core Results: Adjusted EPS Adjusted Earnings per Share ("Adjusted EPS") QUARTERLY TREND 3Q 22 2Q 22 1Q 22 4Q 21 3Q 21 2Q 21 1Q 21 4Q 20 3Q 20 2Q 20 1Q 20 4Q 19 3Q 19 Numerator ($ millions) GAAP net income / (loss) attributable to common shareholders $
Slide 35: GAAP to Core Results: Adjusted TBVPS
Supplemental 3Q 2022 Preliminary Results GAAP to Core Results: Adjusted TBVPS Adjusted Tangible Book Value per Share ("Adjusted TBVPS") QUARTERLY TREND 3Q 22 2Q 22 1Q 22 4Q 21 3Q 21 2Q 21 1Q 21 4Q 20 3Q 20 2Q 20 1Q 20 4Q 19 3Q 19 Numerator ($ billions) GAAP shareholder's equity $ 12.4 $ 14.0 $ 15.4
Slide 36: GAAP to Core Results: Core ROTCE
Supplemental 3Q 2022 Preliminary Results GAAP to Core Results: Core ROTCE Core Return on Tangible Common Equity ("Core ROTCE") QUARTERLY TREND 3Q 22 2Q 22 1Q 22 4Q 21 3Q 21 2Q 21 1Q 21 4Q 20 3Q 20 2Q 20 1Q 20 4Q 19 3Q 19 Numerator ($ millions) GAAP net income / (loss) attributable to common sharehol
Slide 37: GAAP to Core Results: Adjusted Efficiency Ratio
Supplemental 3Q 2022 Preliminary Results GAAP to Core Results: Adjusted Efficiency Ratio Adjusted Efficiency Ratio QUARTERLY TREND 3Q 22 2Q 22 1Q 22 4Q 21 3Q 21 Numerator ($ millions) GAAP noninterest expense $ 1,161 $ 1,138 $ 1,122 $ 1,090 $ 1,002 Rep and warrant expense - - - - - Insurance expense
Slide 38: Non-GAAP Reconciliation: Core Income
Supplemental 3Q 2022 Preliminary Results Non-GAAP Reconciliation: Core Income ($ millions) 3Q 22 2Q 22 3Q 21 Change in fair Change in fair Change in fair (1) (1) GAAP Core OID value of equity Repositioning Non-GAAP GAAP Core OID value of equity Repositioning Non-GAAP GAAP Core OID value of equity Re
Slide 39: Non-GAAP Reconciliations
Supplemental 3Q 2022 Preliminary Results Non-GAAP Reconciliations Net Financing Revenue (ex. Core OID) QUARTERLY TREND ($ millions) 3Q 22 2Q 22 1Q 22 4Q 21 3Q 21 2Q 21 1Q 21 4Q 20 3Q 20 2Q 20 1Q 20 4Q 19 3Q 19 GAAP Net Financing Revenue [x] $ 1,719 $ 1,764 $ 1,693 $ 1,654 $ 1,594 $ 1,547 $ 1,372 $ 1