Slide 1: Ally Financial Inc. 2Q 2018 Earnings Review
Ally Financial Inc. 2Q 2018 Earnings Review July 26, 2018 Contact Ally Investor Relations at (866) 710-4623 or investor.relations@ally.com
Slide 2: Forward-Looking Statements and Additional Information
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 Current Reports on Form 8-K.
Slide 3: GAAP and Core Results - Quarterly
GAAP and Core Results - Quarterly ($ millions except per share data) 2Q 18 1Q 18 4Q 17 3Q 17 2Q 17 GAAP net income attributable to common shareholders ("NIAC") $ 349 $ 250 $ 181 $ 282 $ 252 (1)(2) Core net income attributable to common shareholders $ 358 $ 300 $ 310 $ 292 $ 265 GAAP earnings per com
Slide 4: Second Quarter Highlights
Second Quarter Highlights Continued execution along strategic and financial path ➢ Adjusted EPS(1) of 83 cents – up 43% YoY ➢ Optimization of auto business evident in diversified originations and risk-adjusted returns − Consumer auto originations of $9.6 billion − Retail auto portfolio yield up 28 b
Slide 5: Core Metric Trend
Core Metric Trend Adjusted Earnings per Share(1) Adjusted Total Net Revenue(2) $0.83 ($ millio ns) $1,480 $1,492 $1,472 $1,463 $1,471 $0.70 $0.68 $1,399 $1,391 $379 $0.65 $1,383 $381 $356 $1,372 $388 $394 $1,353 $1,344 $0.56 $0.58 $0.54 $0.54 $1,313 $388 $0.51 $0.52 $0.52 $1,295 $374 $392 $396 $358
Slide 6: Second Quarter Financial Results
Second Quarter Financial Results ($ millions; except per share data) Increase / (Decrease) vs. 2Q 18 1Q 18 2Q 17 QoQ YoY (1) Net financing revenue (excluding Core OID) $ 1,115 $ 1,069 $ 1,084 $ 46 $ 31 Core OID (21) (20) (17) (1) (4) Net financing revenue (as reported) $ 1,094 $ 1,049 $ 1,067 $ 45 $
Slide 7: Net Financing Revenue
Net Financing Revenue • Net financing revenue (excluding Core OID)(1) of $1,115 million, up $31 million YoY driven by asset and deposit growth and liability mix shift • Net financing revenue (excluding Core OID)(1) up QoQ due primarily to higher retail and commercial auto yields − NIM of 2.68%; NIM
Slide 8: Deposits
Deposits • Total deposits of $98.7 billion – up $12.6 billion YoY Stable, consistent growth of retail deposits − Customer retention remains strong at 96% in 2Q Deposit Levels (EOP) and Customer Retention Rate ($ billions) $97.4 $98.7 • Retail deposit growth of $10.6 billion YoY $86.2 $90.1 $93.3 $15
Slide 9: Capital
Capital • Received non-objection to 2018 CCAR capital plan Capital Ratios(1) and Risk-Weighted Assets − 32% increase in share repurchases up to $1 billion 13.2% 12.9% 12.8% 12.5% 12.6% 11.1% 11.4% 11.2% 11.1% 11.0% − Increase in quarterly cash dividend on common stock 9.4% 9.6% 9.5% 9.2% 9.3% from $
Slide 10: Asset Quality
Asset Quality Consolidated Net Charge-Offs Provision Expense ($ millions) 550% 500% 1.01% Provision Expense 1Q 17 2Q 17 3Q 17 4Q 17 1Q 18 2Q 18 450% 0.88% 0.86% 0.85% 0.84% 400% 0.75% Retail Auto $ 267 $ 260 $ 314 $ 286 $ 253 $ 168 350% 0.66% 0.57% 300% Commercial Auto 1 6 (2) 2 6 2 250% 200% Mortga
Slide 11: Auto Finance – Results
Auto Finance – Results • Auto Finance reported pre-tax income of $382 million in Increase/(Decrease) vs. 2Q, up $35 million YoY and up $114 million QoQ Key Financials ($ millions) 2Q 18 1Q 18 2Q 17 Net financing revenue $ 925 $ 16 $ (7) – Net financing revenue down YoY due to lease portfolio Total o
Slide 12: Auto Finance – Key Metrics
Auto Finance – Key Metrics Consumer Originations Origination Mix ($ billions; % of $ originations) (% of $ originations) $9.5 $9.6 $8.9 $8.6 $9.1 42% $8.1 48% 47% 45% 50% 51% 40% 39% 44% 45% 41% 40% 11% 14% 10% 13% 11% 13% 28% 30% 29% 26% 28% 28% 42% 40% 44% 44% 39% 36% 32% 30% 32% 32% 30% 27% 11% 1
Slide 13: Insurance
Insurance • Pre-tax income of $11 million Increase/(Decrease) vs. Key Financials ($ millions) 2Q 18 1Q 18 2Q 17 • Core pre-tax income(1) of $3 million in 2Q, up $24 Premiums, service revenue earned and other $ 241 $ (19) $ 11 million YoY and down $59 million QoQ Losses and loss adjustment expenses 1
Slide 14: Corporate Finance
Corporate Finance • Pre-tax income of $58 million Increase/(Decrease) vs. • Core pre-tax income(1) of $58 million in 2Q, up $23 Key Financials ($ millions) 2Q 18 1Q 18 2Q 17 million YoY and up $24 million QoQ Net financing revenue $ 57 $ 11 $ 9 (1) Total other revenue (adjusted) 14 1 4 – Net financi
Slide 15: Mortgage Finance
Mortgage Finance • Pre-tax income of $14 million in 2Q, up $7 million Increase/(Decrease) vs. YoY and up $6 million QoQ Key Financials ($ millions) 2Q 18 1Q 18 2Q 17 Net financing revenue $ 44 $ 1 $ 12 – Higher net financing revenue YoY driven by asset Total other revenue 2 1 1 balance growth from b
Slide 16: Investment in Digital Enhancements
Investment in Digital Enhancements Innovative customer-centric approach to digital banking ✓ Streamlined intuitive design of all digital assets - new homepage, responsive mobile web, and new mobile app experience ✓ Tailored digital experiences based on in-depth customer insights ✓ Systematically imp
Slide 17: Conclusion
Conclusion ➢ Continued execution along strategic earnings growth path ➢ Auto finance business optimizing retail auto returns ➢ Strong customer growth supports the long-term strategic path ➢ Deposit franchise provides structural benefit to long-term earnings growth path ➢ Focused on building scale in
Slide 18: Supplemental Charts
Supplemental Charts
Slide 19: Results by Segment
Supplemental Results by Segment Pre-Tax Income Increase/(Decrease) vs. ($ millions) 2Q 18 1Q 18 2Q 17 1Q 18 2Q 17 Automotive Finance $ 382 $ 268 $ 347 $ 114 $ 35 Insurance 11 27 (21) (16) 32 Dealer Financial Services $ 393 $ 295 $ 326 $ 98 $ 67 Corporate Finance 58 29 35 29 23 Mortgage Finance 14 8
Slide 20: Funding and Liquidity
Supplemental Funding and Liquidity • Ally Bank funded assets at 86% up 9 pts YoY Growth in Bank Funded Assets • Deposits at 64% of total funding (ex Core OID balance) ($ billions) up 5 pts YoY $167.1 $170.0 $171.3 $164.3 $164.0 • $2.8 billion of new secured funding in 2Q 18 – $2.0 billion retail aut
Slide 21: Corporate and Other
Supplemental Corporate and Other • Corporate and Other includes the impact of centralized Increase/(Decrease) vs. asset and liability management, corporate overhead Key Financials ($ millions) 2Q 18 1Q 18 2Q 17 Net financing revenue $ 55 $ 16 $ 14 allocation activities, the legacy mortgage portfolio
Slide 22: Interest Rate Sensitivity
Supplemental Interest Rate Sensitivity Net Financing Revenue Impacts (1): Baseline vs. Forward Curve 2Q 18 1Q 18 (2) (2) ($ millions) Gradual Instantaneous Gradual Instantaneous -100 bp $ (28) $ (80) $ (39) $ (88) +100 bp $ (7) $ (72) $ (4) $ (51) Stable rate environment n/m $ (27) n/m $ (30) (1) Ne
Slide 23: Deferred Tax Asset
Supplemental Deferred Tax Asset Deferred Tax Asset 2Q 18 (1) 1Q 18 (1) ($ millions) Gross DTA/(DTL) Valuation Net DTA/(DTL) Net DTA/(DTL) Balance Allowance Balance Balance Net Operating Loss (Federal) $ 125 $ - $ 125 $ 274 Tax Credit Carryforwards 2,014 (984) 1,030 1,015 State/Local Tax Carryforward
Slide 24: Notes on non-GAAP and other financial measures
Supplemental Notes on non-GAAP and other 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 Earnings per Share (Adj
Slide 25: GAAP to Core Results - Quarterly
Supplemental GAAP to Core Results - Quarterly Adjusted Earnings per Share ("Adjusted EPS") QUARTERLY TREND 2Q 18 1Q 18 4Q 17 3Q 17 2Q 17 1Q 17 4Q 16 3Q 16 2Q 16 1Q 16 4Q 15 3Q 15 2Q 15 Numerator ($ millions) GAAP net income attributable to common shareholders $ 349 $ 250 $ 181 $ 282 $ 252 $ 214 $ 24
Slide 26: GAAP to Core Results - Quarterly
Supplemental GAAP to Core Results - Quarterly Adjusted Tangible Book Value per Share ("Adjusted TBVPS") QUARTERLY TREND 2Q 18 1Q 18 4Q 17 3Q 17 2Q 17 1Q 17 4Q 16 3Q 16 2Q 16 1Q 16 4Q 15 3Q 15 2Q 15 Numerator ($ billions) GAAP shareholder's equity $ 13.1 $ 13.1 $ 13.5 $ 13.6 $ 13.5 $ 13.4 $ 13.3 $ 13
Slide 27: GAAP to Core Results - Quarterly
Supplemental GAAP to Core Results - Quarterly Core Return on Tangible Common Equity ("Core ROTCE") QUARTERLY TREND 2Q 18 1Q 18 4Q 17 3Q 17 2Q 17 Numerator ($ millions) GAAP net income attributable to common shareholders $ 349 $ 250 $ 181 $ 282 $ 252 Discontinued operations, net of tax (1) 2 (2) (2)
Slide 28: GAAP to Core Results - Quarterly
Supplemental GAAP to Core Results - Quarterly Adjusted Efficiency Ratio QUARTERLY TREND 2Q 18 1Q 18 4Q 17 3Q 17 2Q 17 Numerator ($ millions) GAAP noninterest expense $ 839 $ 814 $ 769 $ 753 $ 810 Rep and warrant expense 2 0 0 0 0 Insurance expense (268) (231) (213) (218) (280) Adjusted noninterest e
Slide 29: Notes on non-GAAP and other financial measures
Supplemental Notes on non-GAAP and other financial measures Regulatory Capital - Basel III transition to fully phased-in ($ billions) 2Q 18 1Q 18 4Q 17 3Q 17 2Q 17 Numerator Common equity tier 1 capital (transition) $ 13.3 $ 13.1 $ 13.2 $ 13.2 $ 13.1 DTAs arising from NOL and tax credit carryforward
Slide 30: Notes on non-GAAP and other financial measures
Supplemental Notes on non-GAAP and other financial measures ($ millions) 2Q 18 1Q 18 2Q 17 Change in the Change in the Change in the Core OID & Core OID & Core OID & fair value of fair value of fair value of GAAP Repositioning Non-GAAP (1) GAAP Repositioning Non-GAAP (1) GAAP Repositioning Non-GAAP
Slide 31: Notes on non-GAAP and other financial measures
Supplemental Notes on non-GAAP and other financial measures Original issue discount amortization expense QUARTERLY TREND ($ millions) 2Q 18 1Q 18 4Q 17 3Q 17 2Q 17 1Q 17 4Q 16 3Q 16 2Q 16 1Q 16 4Q 15 3Q 15 2Q 15 Core original issue discount (Core OID) amortization expense (1) $ 21 $ 20 $ 19 $ 18 $ 1