Ally Financial Inc. · NYSE:ALLY
Ally Financial — Q3 2021 Earnings Presentation
40 slides from Ally Financial's earnings presentation, Oct 21, 2021
Slide 1: Ally Financial Inc. 3Q 2021 Earnings Review
3Q 2021 Preliminary Results Ally Financial Inc. 3Q 2021 Earnings Review October 21, 2021 Contact Ally Investor Relations at (866) 710-4623 or investor.relations@ally.com 1
Slide 2: Forward-Looking Statements and Additional Information
3Q 2021 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 2021 Preliminary Results GAAP and Core Results: Quarterly ($ millions except per share data) 3Q 21 2Q 21 1Q 21 4Q 20 3Q 20 GAAP net income attributable to common shareholders (NIAC) $ 683 $ 900 $ 796 $ 687 $ 476 Core net income attributable to common shareholders (1)(2) $ 782 $ 868 $ 790 $ 606 $
Slide 4: Ally's Culture and Priorities
3Q 2021 Preliminary Results Ally’s Culture and Priorities do it right customers culture & values Relentless focus on our dealers, consumers & commercial clients employees Ongoing prioritization of our teammates and their well-being Driving long-term, enhanced value for communities ALL stakeholders D
Slide 5: 3Q 2021 Highlights
3Q 2021 Preliminary Results 3Q 2021 Highlights Focused Execution Delivering Results $2.16 24.2% $2.11B 11.2% Adjusted Core Adjusted Total CET1 EPS(1) ROTCE(1) Net Revenue(1) Capital Ratio • Ally acquiring Fair Square Financial for $750 million (all-cash) Remain on track with FY 2021 buyback authoriz
Slide 6: Quarterly Core Metric Trends
3Q 2021 Preliminary Results Quarterly Core Metric Trends Adjusted Earnings Per Share & Core ROTCE Adjusted Total Net Revenue & Core PPNR (3) (3) (1) (2) ($ billio ns) Adj. To tal Net Revenue Core Pre-P rovisio n Net Re ven ue (Co re P PNR) Adj. EPS Core ROTCE $2.33 $2.09 $2.16 $2.14 $2.11 $1.88 $1.9
Slide 7: Strategically and Financially Attractive Acquisition
3Q 2021 Preliminary Results Strategically and Financially Attractive Acquisition • Ally’s acquisition of Fair Square advances our evolution as the leading digital consumer bank ✓ • Enhances frictionless, innovative product offerings available to our growing customer base Consumer Auto Loans Checking
Slide 8: Scalable, Digital-first Credit Card Provider
3Q 2021 Preliminary Results Scalable, Digital-first Credit Card Provider 2016 80 658k $763M 74% 5% FairSquare Current Active Loan Loan Balance Run-rate Return Founded Employees Cardholders Balances CAGR Since 2017 on Assets Customer-Centric Robust Growth Digital-DNA Data-Driven Scalable, Tech-Forwar
Slide 9: 3Q 2021 Financial Results
3Q 2021 Preliminary Results 3Q 2021 Financial Results Inc / (Dec) v. $ millions; except per share data 3Q 21 2Q 21 3Q 20 2Q 21 3Q 20 Net financing revenue (ex. Core OID) (1) $ 1,603 $ 1,556 $ 1,209 $ 47 $ 394 (1) Core OID (9) (9) (9) 0 (0) Net financing revenue $ 1,594 $ 1,547 $ 1,200 $ 47 $ 394 Adj
Slide 10: Balance Sheet and Net Interest Margin
3Q 2021 Preliminary Results Balance Sheet and Net Interest Margin ($ millions) 3Q 21 2Q 21 3Q 20 Average Average Balance Yield Average Balance Yield Balance Yield Retail Auto Loan $ 76,557 6.62% $ 74,662 6.70% $ 72,999 6.56% Retail Auto Loan (ex. hedge impact) 6.84% 6.92% 6.83% Auto Lease (net of de
Slide 11: Capital Ratios and Shareholder Distributions
3Q 2021 Preliminary Results Capital Ratios and Shareholder Distributions • 3Q 2021 CET1 ratio of 11.2% Capital Ratios and Risk-Weighted Assets • Remain on track with 2021 full-year $2B share repurchase ($ billions) 14.6% 14.8% 14.6% program 14.1% 14.1% 13.1% 12.4% 12.8% 12.8% 12.1% 11.1% 11.3% 11.2%
Slide 12: Asset Quality: Key Metrics
3Q 2021 Preliminary Results Asset Quality: Key Metrics Consolidated Net Charge-Offs (NCOs) Net Charge-Off Activity ($ millions) Allowance as % of Annualized NCOs Annualized NCO Rate Net Charge-Offs 3Q 20 4Q 20 1Q 21 2Q 21 3Q 21 50% 00% 0.98% 50% 00% 0.91% 0.88% 50% 00% 0.83% 0.84% Retail Auto $ 117
Slide 13: Asset Quality: Coverage and Reserves
3Q 2021 Preliminary Results Asset Quality: Coverage and Reserves Consolidated Coverage Ratio Retail Auto Coverage Ratio ($ billions) ($ billions) Reserve - $ Reserve - % Reserve - $ Reserve - % 2.85% 2.87% 4.09% 4.06% 2.78% 2.79% 2.79% 2.75% 3.91% 3.95% 2.54% 3.80% 3.70% 3.62% 2.03% 3.34% 0.99% $2.8
Slide 14: Ally Bank: Deposit & Customer Trends
3Q 2021 Preliminary Results Ally Bank: Deposit & Customer Trends • Retail Deposits of $131.6 billion, up 9% YoY Total Deposits: Retail & Brokered Balances – Total deposits of $139.4 billion, up 3% YoY, representing 90% of ($ billions, EoP) Retail Brokered / Other Customer Retention Rate Ally’s overa
Slide 15: Ally Bank: Leading, Growing, All-Digital Disruptor
3Q 2021 Preliminary Results Ally Bank: Leading, Growing, All-Digital Disruptor #1 50 $132B 12+ Largest All-Digital, Consecutive Quarters Retail Deposit Consecutive Years of Best Internet Bank Direct U.S. Bank(1) of Customer Growth Balances Retail Deposit Growth (2017-2021) Ally Bank Customers Ally I
Slide 16: Auto Finance
3Q 2021 Preliminary Results Auto Finance Inc / (Dec) v. • Auto pre-tax income of $825 million in 3Q 2021, Key Financials ($ millions) 3Q 21 2Q 21 3Q 20 reflecting industry leading capabilities and well- Net financing revenue $ 1,329 $ (4) $ 227 positioned platform Total other revenue 61 - - Total ne
Slide 17: Auto Finance: Agile Market Leader
3Q 2021 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 2021 Preliminary Results Insurance Inc / (Dec) v. • Insurance pre-tax income of $24 million and core pre-tax Key Financials ($ millions) 3Q 21 2Q 21 3Q 20 income, excluding the change in fair value of equities of Premiums, service revenue earned and other $ 282 $ (1) $ 3 $89 million in 3Q 2021 VS
Slide 19: Corporate Finance
3Q 2021 Preliminary Results Corporate Finance Inc / (Dec) v. • Corporate Finance pre-tax income of $61 million, and Key Financials ($ millions) 3Q 21 2Q 21 3Q 20 core pre-tax income, excluding the change in fair value Net financing revenue $ 77 $ - $ 2 of equities, of $60 million in 3Q 2021 (1) Adju
Slide 20: Mortgage Finance
3Q 2021 Preliminary Results Mortgage Finance Inc / (Dec) v. • Mortgage pre-tax income of $6 million in 3Q 2021 Key Financials ($ millions) 3Q 21 2Q 21 3Q 20 Net financing revenue $ 36 $ 13 $ 6 – Net financing revenue trends reflect ongoing elevated Total other revenue 19 (3) (17) prepayment activity
Slide 21: Financial Outlook
3Q 2021 Preliminary Results Financial Outlook Structurally more profitable company Core ROTCE Progression (1) YTD’21 Reserve Reduction 20% 20%+ Fair Square +100-125bps Enhanced, Sustainable Return & Growth Profile 15%+ 15%+ ✓ Annual expansion of PPNR and Operating Leverage discipline 12.3% 12.0% ✓ E
Slide 22: Strategic Priorities
3Q 2021 Preliminary Results Strategic Priorities ‘Do It Right’ Culture Leading, adaptable Auto and Insurance and Consumer & digitally-based Ally Bank platforms Commercial Lender Ongoing customer growth and relationship Savings & deepening across scalable platforms Insurance Checking Sustainable grow
Slide 23: Supplemental
3Q 2021 Preliminary Results Supplemental 23
Slide 24: Results by Segment
Supplemental 3Q 2021 Preliminary Results Results by Segment Core pre-tax income Walk Inc / (Dec) v. Segment Detail ($ millions) 3Q 21 2Q 21 3Q 20 2Q 21 3Q 20 Automotive Finance $ 825 $ 917 $ 566 $ (92) $ 259 Insurance 24 87 78 (63) (54) Dealer Financial Services $ 849 $ 1,004 $ 644 $ (155) $ 205 Cor
Slide 25: Funding Profile Details
Supplemental 3Q 2021 Preliminary Results Funding Profile Details Funding Mix Deposit Mix Brokered / Other Retail CD MMA/OSA/Checking Deposits Secured Debt FHLB / Other Unsecured Debt 3.00% 8% 7% 6% 3% 8% 12% 7% 1% 2.50% 4% 12% 6% 56% 58% 62% 65% 67% 6% 2.00% 1.50% 90% 82% 74% 1.00% 65% 34% 33% 30% 2
Slide 26: Corporate and Other
Supplemental 3Q 2021 Preliminary Results Corporate and Other Inc / (Dec) v. Key Financials ($ millions) 3Q 21 2Q 21 3Q 20 • Corporate and Other activity reflects: Net financing revenue $ 138 $ 39 $ 153 Total other revenue 12 (66) (28) – Centralized asset and liability management Total net revenue $
Slide 27: Interest Rate Risk Sensitivities
Supplemental 3Q 2021 Preliminary Results Interest Rate Risk Sensitivities Net Financing Revenue Sensitivity Analysis (1) ($ millions) 3Q 21 2Q 21 Change in interest rates Gradual (2) Instantaneous Gradual (2) Instantaneous (3) -25 bps $ (27) $ (54) $ (43) $ (96) +100 bps $ 70 $ 53 $ (71) $ (70) Stab
Slide 28: Deferred Tax Asset
Supplemental 3Q 2021 Preliminary Results Deferred Tax Asset Deferred Tax Asset 3Q 21(1) 2Q 21(1) ($ millions) Gross DTA Valuation Net DTA Net DTA Balance Allowance Balance Balance Net Operating Loss (Federal) $ 7 $ - $ 7 $ 8 Tax Credit Carryforwards 918 (702) 216 266 State/Local Tax Carryforwards 22
Slide 29: Fair Square Credit Card Offerings
3Q 2021 Preliminary Results Fair Square Credit Card Offerings Attractive, customer-centric product offerings No Surprise $0 Fraud Free Annual Benefits & Fees Liability FICO Fee Rewards e.g. No Balance Platinum P P P $0 Transfer Fees 2% Gas, Grocery, Phrmc'y Rewards P P P $0 / $39 1% Everyw here Else
Slide 30: Notes on Non-GAAP Financial Measures
Supplemental 3Q 2021 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 31: Notes on Other Financial Measures
Supplemental 3Q 2021 Preliminary Results Notes on Other Financial Measures 8) 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 2021 Preliminary Results Additional Notes Page – 15 | Ally Bank: Leading, Growing, All-Digital Disruptor (1) Source: FDIC, FFIEC Call Reports and Company filings of branchless banks including Marcus, Discover, American Express, Synchrony. Page – 16 | Auto Finance (1) Noninterest expe
Slide 33: Additional Notes
Supplemental 3Q 2021 Preliminary Results Additional Notes Page – 20 | Mortgage Finance (1) Noninterest expense includes corporate allocations of $24 million in 3Q 2021, $21 million in 2Q 2021, and $19 million in 3Q 2020. (2) 1st lien only. Updated home values derived using a combination of appraisal
Slide 34: GAAP to Core Results: Adjusted EPS - Quarterly
Supplemental 3Q 2021 Preliminary Results GAAP to Core Results: Adjusted EPS - Quarterly Adjusted Earnings per Share ("Adjusted EPS") QUARTERLY TREND 3Q 21 2Q 21 1Q 21 4Q 20 3Q 20 2Q 20 1Q 20 4Q 19 3Q 19 2Q 19 1Q 19 4Q 18 3Q 18 Numerator ($ millions) GAAP net income / (loss) attributable to common sh
Slide 35: GAAP to Core Results: Adjusted TBVPS - Quarterly
Supplemental 3Q 2021 Preliminary Results GAAP to Core Results: Adjusted TBVPS - Quarterly Adjusted Tangible Book Value per Share ("Adjusted TBVPS") QUARTERLY TREND 3Q 21 2Q 21 1Q 21 4Q 20 3Q 20 2Q 20 1Q 20 4Q 19 3Q 19 2Q 19 1Q 19 4Q 18 3Q 18 Numerator ($ billions) GAAP shareholder's equity $ 17.3 $
Slide 36: GAAP to Core Results: Core ROTCE - Quarterly
Supplemental 3Q 2021 Preliminary Results GAAP to Core Results: Core ROTCE - Quarterly Core Return on Tangible Common Equity ("Core ROTCE") QUARTERLY TREND 3Q 21 2Q 21 1Q 21 4Q 20 3Q 20 2Q 20 1Q 20 4Q 19 3Q 19 2Q 19 1Q 19 4Q 18 3Q 18 Numerator ($ millions) GAAP net income / (loss) attributable to com
Slide 37: GAAP to Core Results: Core ROTCE - Annual
Supplemental 3Q 2021 Preliminary Results GAAP to Core Results: Core ROTCE - Annual Core Return on Tangible Common Equity ("Core ROTCE") FY 2020 FY 2019 FY 2018 FY 2017 FY 2016 FY 2015 FY 2014 Numerator ($ millions) GAAP net income / (loss) attributable to common shareholders $ 1,085 $ 1,715 $ 1,263
Slide 38: GAAP to Core Results: Adjusted Efficiency Ratio - Quarterly
Supplemental 3Q 2021 Preliminary Results GAAP to Core Results: Adjusted Efficiency Ratio - Quarterly Adjusted Efficiency Ratio QUARTERLY TREND 3Q 21 2Q 21 1Q 21 4Q 20 3Q 20 Numerator ($ millions) GAAP noninterest expense $ 1,002 $ 1,075 $ 943 $ 1,023 $ 905 Rep and warrant expense - - - 0 - Insurance
Slide 39: Non-GAAP Reconciliation – Core Income
Supplemental 3Q 2021 Preliminary Results Non-GAAP Reconciliation – Core Income ($ millions) 3Q 21 2Q 21 3Q 20 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 R
Slide 40: Non-GAAP Reconciliations
Supplemental 3Q 2021 Preliminary Results Non-GAAP Reconciliations Net Financing Revenue (ex. Core OID) QUARTERLY TREND ($ millions) 3Q 21 2Q 21 1Q 21 4Q 20 3Q 20 2Q 20 1Q 20 4Q 19 3Q 19 2Q 19 1Q 19 4Q 18 3Q 18 GAAP Net Financing Revenue $ 1,594 $ 1,547 $ 1,372 $ 1,303 $ 1,200 $ 1,054 $ 1,146 $ 1,156