Slide 1: Ally Financial Inc. 1Q 2016 Earnings Review
Ally Financial Inc. 1Q 2016 Earnings Review April 26, 2016 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 The following should be read in conjunction with the financial statements, notes and other information contained in the Company’s Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K. This information is pr
Slide 3: First Quarter Highlights
First Quarter Highlights • Solid quarter of financial results and financial targets on track – Net income of $250 million, Adjusted EPS(1) of $0.52 and Core ROTCE(1) of 9.8% – Increased Adjusted Tangible Book Value(1) per share by $0.8 QoQ and $1.6 YoY to $25.4 • Improved profitability on retail aut
Slide 4: Strengthening Franchise to Drive Long-Term Shareholder Value
Strengthening Franchise to Drive Long-Term Shareholder Value • Auto finance is positioned to provide attractive risk adjusted returns through the cycle • Capital optimization remains critical priority • Tangible drivers of future EPS growth – Eliminating preferred dividends - Series A to be called i
Slide 5: Brokerage and Wealth Management Fit for Ally
Brokerage and Wealth Management Fit for Ally Creating the Premier Digital Financial Services Company 50% Ally customers that would • The addition of brokerage and wealth management is a natural extension consider a digital solution of our deposits business, creating a full suite of financial product
Slide 6: Brokerage and Wealth Management Acquisition
Brokerage and Wealth Management Acquisition Transaction Overview About TradeKing • Signed agreement to acquire TradeKing Group, Inc. • Founded in 2005, currently has approximately $4.5 billion AUM for approximately $275 million • Online broker/dealer for self-directed investors • Expandable technolo
Slide 7: TradeKing Financial Details
TradeKing Financial Details • Expect gradual and significant growth of business: – Leverage power of the Ally brand and marketing capabilities – Secular trends in consumer adoption of digital financial services – Cross sell to Ally’s growing customer base Current YE 2018 Expectations Brokerage AUM:
Slide 8: First Quarter Financial Results
First Quarter Financial Results Increase/(Decrease) vs. ($ millions except per share data) 1Q 16 4Q 15 1Q 15 4Q 15 1Q 15 (1) Net financing revenue $ 964 $ 995 $ 860 $ (31) $ 103 (1)(2) Total other revenue 380 358 440 22 (60) Provision for loan losses 220 240 116 (20) 104 (2) Controllable expenses 47
Slide 9: Results by Segment
Results by Segment • Auto Finance results driven by continued strong originations – Higher net financing revenue due to retail loan growth and improved yields – Partially offset by higher provision expense due to portfolio growth and more profitable mix • Insurance results largely driven by higher w
Slide 10: Net Interest Margin
Net Interest Margin • Net Interest Margin(1) up 16 bps YoY driven by higher asset yields and lower cost of funds – Cost of funds(1) down 3 bps YoY driven by continued deposit growth partially offset by increased rate on variable debt • Positioned AFS and hedge portfolio and realized gains through Ot
Slide 11: Deposits
Deposits • Deposit business showing strong momentum with $3.5 Stable, consistent growth of retail deposits billion of retail deposit growth QoQ and $8.3 billion YoY Ally Bank Deposit Levels – 33% of quarterly deposit growth from existing ($ billions) $66.2 $70.0 $61.6 $63.7 $60.5 customers $10.7 $11
Slide 12: Funding and Liquidity
Funding and Liquidity • Available liquidity allows Ally to fund planned loan originations for ~3 years assuming no unsecured issuance or term securitizations – Strong total liquidity levels of nearly $16 billion • Secured funding markets continue to be supportive – $5.4 billion of new secured fundin
Slide 13: Significant Long-Term Funding Opportunities
Significant Long-Term Funding Opportunities • Significant longer-term opportunity to continue to lower wholesale funding cost given strong deposit Continued Shift in Funding Profile growth 1Q 2015 1Q 2016 – Recently issued unsecured debt to eliminate preferred securities FHLB 4% FHLB 5% Secured Secu
Slide 14: Capital
Capital • Capital ratios up QoQ driven by consistent Capital Ratios and Risk-Weighted Assets profitability and DTA utilization • Preliminary fully phased-in Basel III Common 14.0% 12.9% 13.0% 13.0% 12.6% 12.5% Equity Tier 1 (CET1) ratio of 9.2% 11.7% 11.9% 11.1% 11.5% 10.4% 9.3% 9.6% 9.2% – Prelimin
Slide 15: Asset Quality
Asset Quality Consolidated Net Charge-Offs Provision Expense 0.72% ($ millions) 0.68% 0.61% 0.64% 0.60% 0.61% Provision Expense 4Q 14 1Q 15 2Q 15 3Q 15 4Q 15 1Q 16 0.39% Retail Auto $ 168 $ 158 $ 152 $ 200 $ 229 $ 207 0.34% Commercial Auto 7 (31) (20) 1 7 2 344% Mortgage Finance 2 2 4 3 (2) 3 244% 1
Slide 16: Auto Finance – Results
Auto Finance – Results • Auto Finance reported pre-tax income of $337 million in Increase/(Decrease) vs. 1Q, up $31 million YoY and up $4 million QoQ Key Financials ($ millions) 1Q 16 4Q 15 1Q 15 Net financing revenue $ 896 $ (4) $ 87 – Net financing revenue higher YoY due to successful Total other
Slide 17: Auto Finance – Key Metrics
Auto Finance – Key Metrics Consumer Originations Origination Mix ($ billions; % of $ originations) (% of $ originations) $10.8 $11.1 $9.8 30% 36% 37% 35% 37% $9.0 $9.3 $9.0 45% 32% 32% 22% 28% 9% 33% 37% 27% 17% 9% 11% 18% 24% 24% 9% 20% 26% 26% 48% 49% 49% 38% 42% 45% 60% 52% 45% 45% 40% 37% 5% 5%
Slide 18: Insurance
Insurance • Pre-tax income of $50 million, down $28 million YoY and QoQ Increase/(Decrease) vs. Key Financials ($ millions) 1Q 16 4Q 15 1Q 15 – Higher weather losses (early and severe hail storms) Premiums, service revenue earned and other $ 234 $ (4) $ (3) Losses and loss adjustment expenses 73 19
Slide 19: Mortgage Finance
Mortgage Finance • As assets grow, the mortgage segment is expected to Increase/(Decrease) vs. drive operating leverage and meaningful income Key Financials ($ millions) 1Q 16 4Q 15 1Q 15 contribution Total net revenue $ 20 $ 2 $ 9 Provision for loan losses 3 5 1 • Pre-tax income of $2 million, up $
Slide 20: Corporate Finance
Corporate Finance • Pre-tax income of $11 million down $6 million YoY and Increase/(Decrease) vs. up $2 million from the prior quarter Key Financials ($ millions) 1Q 16 4Q 15 1Q 15 Net financing revenue $ 28 $ 3 $ 8 – Net Financing Revenue up QoQ and YoY driven by Total other revenue 6 3 - strong or
Slide 21: Conclusion
Conclusion Well positioned for continued solid financial results • Improved profitability on new auto originations • Maintaining credit discipline • Strong deposit balance and customer growth • Recently announced redemption of remaining Series A Preferred Stock Driving long term shareholder value •
Slide 22: Supplemental Charts
Supplemental Charts
Slide 23: 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) 1Q 16 4Q 15 1Q 15 allocation activities and the legacy mortgage portfolio Net financing revenue (ex. OID) $
Slide 24: First Quarter Financial Results
Supplemental First Quarter Financial Results Increase/(Decrease) vs. ($ millions) 1Q 16 4Q 15 1Q 15 4Q 15 1Q 15 Net financing revenue (1) $ 964 $ 995 $ 860 $ (31) $ 103 Total other revenue (1)(2) 380 358 440 22 (60) Provision for loan losses 220 240 116 (20) 104 (2) Controllable expenses 473 465 469
Slide 25: Interest Rate Sensitivity
Supplemental Interest Rate Sensitivity Net Financing Revenue Impact(1) vs. Forward Curve 1Q16 4Q15 Ally Modeled 50% Deposit Ally Modeled 50% Deposit $ million Scenario(2) Pass-Through Scenario(2) Pass-Through +100 bp Instantaneous $ (29) $ 73 $ (109) $ 13 +100 bp Gradual (over 12 months) $ (16) $ 21
Slide 26: Deferred Tax Asset
Supplemental Deferred Tax Asset Deferred Tax Asset 1Q 16 (1) 4Q 15 ($ millions) Gross DTA/(DTL) Valuation Net DTA/(DTL) Net DTA/(DTL) Balance Allowance Balance Balance Net Operating Loss (Federal) $ 935 $ - $ 935 $ 950 Tax Credit Carryforwards 1,946 (471) 1,475 1,469 State/Local Tax Carryforwards 18
Slide 27: Notes on non-GAAP and other financial measures
Supplemental Notes on non-GAAP and other financial measures $ in millions 1Q 16 4Q 15 1Q 15 OID & OID & OID & GAAP Repositioning Non-GAAP (1) GAAP Repositioning Non-GAAP (1) GAAP Repositioning Non-GAAP (1) Items Items Items Consolidated Ally Net financing revenue $ 951 $ 13 $ 964 $ 983 $ 12 $ 995 $
Slide 28: Notes on non-GAAP and other financial measures
Supplemental Notes on non-GAAP and other financial measures The following are non-GAAP measures which are important to the reader of the Consolidated Financial Statements but should be supplemental to primary U.S. GAAP measures. 1) Core pre-tax income (loss) is a non-GAAP financial measure. It is de