Ally Financial Inc. · NYSE:ALLY
Ally Financial — Q1 2023 Earnings Presentation
47 slides from Ally Financial's earnings presentation, Apr 19, 2023
Slide 1: Ally Financial Inc. 1Q 2023 Earnings Review
1Q 2023 Preliminary Results Ally Financial Inc. 1Q 2023 Earnings Review April 19, 2023 Contact Ally Investor Relations at (866) 710-4623 or investor.relations@ally.com 1
Slide 2: Forward-Looking Statements and Additional Information
1Q 2023 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
1Q 2023 Preliminary Results GAAP and Core Results: Quarterly ($ millions, except per share data) 1Q 23 4Q 22 3Q 22 2Q 22 1Q 22 GAAP net income attributable to common shareholders (NIAC) $ 291 $ 251 $ 272 $ 454 $ 627 (1)(2) Core net income attributable to common shareholders $ 250 $ 327 $ 346 $ 570 $
Slide 4: 1Q 2023 Highlights
1Q 2023 Preliminary Results 1Q 2023 Highlights $0.96 | $0.82 10.8% | 12.5% $2.1B | $2.0B 3.54% | 10.91% GAAP Adj. Return on Core GAAP Adj. Total NIM (1) Est. Retail (ex. OID) EPS EPS(1) Common Equity ROTCE (1) Net Revenue Net Revenue (1) Originated Yield (2) • Results within the quarter include a do
Slide 5: Purpose-Driven Culture
1Q 2023 Preliminary Results Purpose-Driven Culture Powered by our “LEAD” core values and “Do it Right” approach L Look Employees externally Invest in our people and culture to drive purpose Execute with E excellence Customers Treat customers Delivering equally with honesty and integrity long-term Ac
Slide 6: Diversified Consumer Deposits Franchise
1Q 2023 Preliminary Results Diversified Consumer Deposits Franchise Stable and growing deposit vintages since the inception of Ally Bank Ally Retail Deposits by Vintage ($ billions) Highlights 2.8M 91% $50k 96% Retail Deposit of retail deposits are Avg. customer Customer (1) Customers FDIC insured d
Slide 7: 1Q 2023 Retail Deposit Trends
1Q 2023 Preliminary Results 1Q 2023 Retail Deposit Trends $813M of net growth driven by $4B increase in insured balances • Ally’s retail deposit base consisting of 2.8M customers and $138.5B of balances is 91% FDIC insured – 1Q’23 net customer growth of 126k represents highest quarterly growth since
Slide 8: Diversified Funding Sources
1Q 2023 Preliminary Results Diversified Funding Sources Access to alternative funding sources complement retail deposits Estimated 1Q 2023 Incremental Commentary EoP Balance Capacity(1) • Stable & efficient same-day funding $8.2B ~$31B ~Hours • Highly liquid securities portfolio can be pledged via F
Slide 9: Funding and Liquidity
1Q 2023 Preliminary Results Funding and Liquidity Core funded with high quality deposits and strong liquidity position Funding Composition Total Available Liquidity ($ billions) Unsecured Debt Cash and Equivalents FHLB / Other FHLB Unused Pledged Borrowing Capacity Secured Debt Unencumbered Highly L
Slide 10: 1Q 2023 Financial Results
1Q 2023 Preliminary Results 1Q 2023 Financial Results Increase / (Decrease) vs. Consolidated Income Statement 1Q 23 4Q 22 1Q 22 4Q 22 1Q 22 ($ millions, except per share data) Net financing revenue $ 1,602 $ 1,674 $ 1,693 $ (72) $ (91) Core OID (1) 11 11 10 0 2 (1) Net financing revenue (ex. Core OI
Slide 11: Balance Sheet and Net Interest Margin
1Q 2023 Preliminary Results Balance Sheet and Net Interest Margin 1Q 23 4Q 22 1Q 22 Average Average Average ($ millions) Balance Yield Balance Yield Balance Yield Retail Auto Loans $ 83,615 8.49% $ 83,781 7.98% $ 78,224 6.61% Retail Auto Loans (ex. hedge impact) 7.66% 7.37% 6.75% Auto Leases (net of
Slide 12: Interest Rate Risk Positioning
1Q 2023 Preliminary Results Interest Rate Risk Positioning Navigating continued volatility while poised for margin expansion • Positioned to deliver ~4% NIM over the medium term – Naturally liability-sensitive balance sheet leads to near-term NIM compression – Established hedge programs increase flo
Slide 13: Net Interest Margin Dynamics
1Q 2023 Preliminary Results Net Interest Margin Dynamics Expect 2023 full-year average NIM of ~3.5% • NIM trough slightly below 3.5% assuming Fed Funds peak of 5.25% • Continued strength in originated yields driving expansion in retail portfolio yield • Changes to expected funding mix and lower reta
Slide 14: Capital
1Q 2023 Preliminary Results Capital • 1Q 2023 CET1 ratio of 9.2% Capital Ratios and Risk-Weighted Assets • Disciplined approach to capital allocation ($ billions) – Organic loan growth in consumer and commercial assets Total Capital at compelling returns Ratio Tier 1 Ratio • $3.5B of CET1 capital ab
Slide 15: Accumulated Other Comprehensive Income
1Q 2023 Preliminary Results Accumulated Other Comprehensive Income Tangible book value accretion as securities amortize CET1 Tangible Book Value per Share (ex. AOCI) AOCI Impact AOCI Impact (1) Pro Forma CET1 (inc. AOCI) Adj. Tangible Book Value per Share Reg. Minimum + Current Stress Capital Buffer
Slide 16: Asset Quality: Key Metrics
1Q 2023 Preliminary Results Asset Quality: Key Metrics Consolidated Net Charge-Offs (NCOs) Net Charge-Off Activity ($ millions) 1Q 22 2Q 22 3Q 22 4Q 22 1Q 23 Retail Auto $ 113 $ 108 $ 217 $ 347 $ 351 Annualized NCO Rate Commercial Auto (1) (1) - - - Mortgage Finance - (1) 1 - - NCOs ($M) Corporate F
Slide 17: Asset Quality: Coverage and Reserves
1Q 2023 Preliminary Results Asset Quality: Coverage and Reserves Consolidated Coverage Retail Auto Coverage ($ billions) ($ billions) Reserve (%) Reserve (%) Reserve ($) Reserve ($) Note: Coverage rate calculations exclude fair value adjustment for loans in hedge accounting relationships. Note: Cove
Slide 18: Retail Auto Underwriting and Pricing Actions
1Q 2023 Preliminary Results Retail Auto Underwriting and Pricing Actions Expect lower-end of ‘low $40B range’ for full-year consumer auto originations driven by tightened underwriting • Continued focus on prudent risk management and prioritizing risk-adjusted returns over volume • High-tech, high-to
Slide 19: Used Vehicle Value Outlook
1Q 2023 Preliminary Results Used Vehicle Value Outlook Used vehicle values ↑ 8% in 1Q’23 – maintaining cautious outlook for 2H‘23 • Stronger than expected consumer demand and dealer activity drove auction values ↑ in 1Q’23 • Continue to expect medium-term decline in used values, while remaining abov
Slide 20: Retail Auto NCO Outlook
1Q 2023 Preliminary Results Retail Auto NCO Outlook Maintaining full-year 2023 NCO range of 1.6 – 1.8% • 1Q NCO rate of 1.68% in-line with 1.70% guide due to ↑ used auction prices, partially offset by ↑ loss frequency • Range of outcomes (1.60% - 1.80%) for full-year 2023 will be influenced by the f
Slide 21: Ally Bank: Deposit and Customer Trends
1Q 2023 Preliminary Results Ally Bank: Deposit and Customer Trends #1 2.8M 56 $138B 14+ 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 • Total deposits of $154 billion, up
Slide 22: Ally Bank: Leading, Growing and Diversified
1Q 2023 Preliminary Results Ally Bank: Leading, Growing and Diversified Growing consumer engagement and adoption trends • Leading, all-digital direct bank demonstrating Ally Invest (Brokerage & Wealth) Net Customer Assets ($ in billions) | Acquired: 2Q’16 growing momentum % of New Accts from – Compl
Slide 23: Auto Finance
1Q 2023 Preliminary Results Auto Finance • Auto pre-tax income of $442 million, reflecting strength Inc / (Dec) v. and scale of industry-leading franchise Key Financials ($ millions) 1Q 23 4Q 22 1Q 22 Net financing revenue $ 1,322 $ (3) $ 27 – Pre-tax income down YoY, primarily driven by historicall
Slide 24: Auto Finance: Agile Market Leader
1Q 2023 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) Consumer Applications and Approval Rate Auto Balance Sh
Slide 25: Insurance
1Q 2023 Preliminary Results Insurance • Insurance pre-tax income of $92 million and core pre-tax Inc / (Dec) v. income of $27 million(1) Key Financials ($ millions) 1Q 23 4Q 22 1Q 22 Premiums, service revenue earned and other $ 309 $ 4 $ 25 – $309 million of earned premiums, up $25 million YoY VSC l
Slide 26: Corporate Finance
1Q 2023 Preliminary Results Corporate Finance • Corporate Finance pre-tax income of $72 million Inc / (Dec) v. Key Financials ($ millions) 1Q 23 4Q 22 1Q 22 – Net financing revenue up YoY reflecting higher Net financing revenue $ 103 $ 9 $ 20 average asset balances Other revenue 29 4 5 Total net rev
Slide 27: Mortgage Finance
1Q 2023 Preliminary Results Mortgage Finance Inc / (Dec) v. • Mortgage pre-tax income of $21 million Key Financials ($ millions) 1Q 23 4Q 22 1Q 22 Net financing revenue $ 54 $ (1) $ 1 – Other revenue down YoY, driven by lower gain on sale volume Total other revenue 4 2 (10) Total net revenue $ 58 $
Slide 28: Financial Outlook
1Q 2023 Preliminary Results Financial Outlook Consistent execution against long-term strategic objectives 2023 Adjusted Earnings Per Share Trajectory (1) ~$4 ~$3.65 Key Updates Since January Macro Economic Assumptions 3/31 Fwd. Curve (FF Peak of 5.25% | YE ’23 FF of 4.50%) NIM ↓~5bps = ~$0.25 Unempl
Slide 29: Strategic Priorities
1Q 2023 Preliminary Results Strategic Priorities Focused execution on driving long-term value for all stakeholders Ensure culture remains aligned with relentless focus on customers, communities, employees, and shareholders Differentiate as a financial ally for our consumer and commercial customers C
Slide 30: Supplemental
1Q 2023 Preliminary Results Supplemental 30
Slide 31: Results By Segment
Supplemental 1Q 2023 Preliminary Results Results By Segment GAAP to Core pre-tax income Walk Inc / (Dec) v. ($ millions) Segment Detail 1Q 23 4Q 22 1Q 22 4Q 22 1Q 22 Automotive Finance $ 442 $ 437 $ 725 $ 5 $ (283) Insurance 92 101 13 (9) 79 Dealer Financial Services $ 534 $ 538 $ 738 $ (4) $ (204)
Slide 32: Funding Profile Details
Supplemental 1Q 2023 Preliminary Results Funding Profile Details Funding Mix Deposit Mix Unsecured Brokered / FHLB / Other 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 33: Corporate and Other
Supplemental 1Q 2023 Preliminary Results Corporate and Other • Pre-tax loss of $239 million and Core pre-tax loss of ($ millions) Inc / (Dec) v. $228 million(1) Key Financials 1Q 23 4Q 22 1Q 22 Net financing revenue $ 97 $ (75) $ (148) Total other revenue 7 (42) (59) – Other revenue lower YoY driven
Slide 34: Interest Rate Risk
Supplemental 1Q 2023 Preliminary Results Interest Rate Risk Net Financing Revenue Sensitivity Analysis (1) ($ millions) 1Q 23 4Q 22 (2) (2) Change in interest rates Gradual Instantaneous Gradual Instantaneous -100 bps $ (104) $ (117) $ (21) $ 21 +100 bps $ 94 $ 109 $ 3 $ (37) Stable rate environment
Slide 35: Deferred Tax Asset
Supplemental 1Q 2023 Preliminary Results Deferred Tax Asset Deferred Tax Asset 1Q 23(1) 4Q 22 ($ millions) Gross DTA Valuation Net DTA Net DTA Balance Allowance Balance Balance Net Operating Loss (Federal) $ 261 $ - $ 261 $ 428 Tax Credit Carryforwards 1,029 (517) 512 443 State/Local Tax Carryforwar
Slide 36: Notes on Non-GAAP Financial Measures
Supplemental 1Q 2023 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 37: Notes on Non-GAAP Financial Measures
Supplemental 1Q 2023 Preliminary Results Notes on Non-GAAP Financial Measures 6) 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 38: Notes on Non-GAAP Financial Measures
Supplemental 1Q 2023 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 39: Notes on Other Financial Measures
Supplemental 1Q 2023 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 40: Additional Notes
Supplemental 1Q 2023 Preliminary Results Additional Notes Page – 21 | Ally Bank: Deposit and Customer Trends (1) Source: FDIC, FFIEC Call Reports and Company filings of branchless banks including Marcus, Discover, American Express, Synchrony. Page – 23 | Auto Finance (1) Noninterest expense includes
Slide 41: Additional Notes
Supplemental 1Q 2023 Preliminary Results Additional Notes Page – 27 | Mortgage Finance (1) Noninterest expense includes corporate allocations of $24 million in 1Q 2023, $23 million in 4Q 2022, and $27 million in 1Q 2022. (2) 1st lien only. Updated home values derived using a combination of appraisal
Slide 42: GAAP to Core Results: Adjusted EPS
Supplemental 1Q 2023 Preliminary Results GAAP to Core Results: Adjusted EPS Adjusted Earnings per Share ("Adjusted EPS") QUARTERLY TREND 1Q 23 4Q 22 3Q 22 2Q 22 1Q 22 4Q 21 3Q 21 2Q 21 1Q 21 4Q 20 3Q 20 2Q 20 1Q 20 Numerator ($ millions) GAAP net income / (loss) attributable to common shareholders $
Slide 43: GAAP to Core Results: Adjusted TBVPS
Supplemental 1Q 2023 Preliminary Results GAAP to Core Results: Adjusted TBVPS Adjusted Tangible Book Value per Share ("Adjusted TBVPS") QUARTERLY TREND 1Q 23 4Q 22 3Q 22 2Q 22 1Q 22 4Q 21 3Q 21 2Q 21 1Q 21 4Q 20 3Q 20 2Q 20 1Q 20 Numerator ($ billions) GAAP shareholder's equity $ 13.4 $ 12.9 $ 12.4
Slide 44: GAAP to Core Results: Core ROTCE
Supplemental 1Q 2023 Preliminary Results GAAP to Core Results: Core ROTCE Core Return on Tangible Common Equity ("Core ROTCE") QUARTERLY TREND 1Q 23 4Q 22 3Q 22 2Q 22 1Q 22 4Q 21 3Q 21 2Q 21 1Q 21 4Q 20 3Q 20 2Q 20 1Q 20 Numerator ($ millions) GAAP net income / (loss) attributable to common sharehol
Slide 45: GAAP to Core Results: Adjusted Efficiency Ratio
Supplemental 1Q 2023 Preliminary Results GAAP to Core Results: Adjusted Efficiency Ratio Adjusted Efficiency Ratio QUARTERLY TREND 1Q 23 4Q 22 3Q 22 2Q 22 1Q 22 Numerator ($ millions) GAAP noninterest expense $ 1,266 $ 1,266 $ 1,161 $ 1,138 $ 1,122 Insurance expense (315) (286) (290) (300) (274) Rep
Slide 46: Non-GAAP Reconciliation: Core Income
Supplemental 1Q 2023 Preliminary Results Non-GAAP Reconciliation: Core Income ($ millions) 1Q 23 4Q 22 1Q 22 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 47: Non-GAAP Reconciliations
Supplemental 1Q 2023 Preliminary Results Non-GAAP Reconciliations Net Financing Revenue (ex. Core OID) QUARTERLY TREND ($ millions) 1Q 23 4Q 22 3Q 22 2Q 22 1Q 22 4Q 21 3Q 21 2Q 21 1Q 21 4Q 20 3Q 20 2Q 20 1Q 20 GAAP Net Financing Revenue [x] $ 1,602 $ 1,674 $ 1,719 $ 1,764 $ 1,693 $ 1,654 $ 1,594 $ 1