Ally Financial Inc. · NYSE:ALLY
Ally Financial — BancAnalysts Association of Boston Conference 2016
26 slides from Ally Financial's conference presentation, Nov 3, 2016
Slide 1: Ally Financial Inc. BancAnalysts Association of Boston Conference
Ally Financial Inc. BancAnalysts Association of Boston Conference November 3, 2016 1
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: Key Messages
Key Messages • Unique opportunity in banking – “Best Online Bank”(1) - well positioned with trends towards digital financial services – Self-help EPS growth with ROE expansion path – Deposit growth a significant driver of value – Returning significant capital to shareholders relative to market capit
Slide 4: Summary of Strategic Path
Summary of Strategic Path Past Current Future Optimize and Theme: Repair Grow Plant Seeds • Diversify from OEM • Optimize returns in • Diversify revenue contracts Auto Finance streams Operational Focus • Grow deposits as • Identify and introduce • Demonstrate ability funding source growth opportunit
Slide 5: Brand proposition: Relentless ally for the customer
Brand proposition: Relentless ally for the customer Simple, straightforward approach to banking – customer is at the core DO RIGHT TIRELESSLY INNOVATE OBSESS OVER THE CUSTOMER Do It Right Customer-centricity Digital Simple Build emotional relationship 24/7 human customer No branches = Great Rates Cu
Slide 6: Collaborative Culture Breeds an Innovative Company
Collaborative Culture Breeds an Innovative Company Alignment of Brand, Culture and Strategy Brand: Do It Right Culture: LEAD • First ever company-wide brand • A clearly defined culture that unifies campaign all associates around four core values • Demonstrates our relentlessness to Look Externally b
Slide 7: Proven Success with Digital Deposit Growth
Proven Success with Digital Deposit Growth Strong Retail Customer and Deposit Growth ~$66 20% CAGR $55 21% CAGR $48 1.2 $43 1.1 $35 0.9 $28 0.8 $22 0.6 0.5 0.4 2010 2011 2012 2013 2014 2015 2016 est. Retail Deposit Customers Ally Bank Retail Deposits (millions) ($ billions) 7
Slide 8: Attractive Demographic Trends
Attractive Demographic Trends Growing Millennial Segment New Deposit Customers by Generation 8
Slide 9: Summary of New Products and Growth Areas
Summary of New Products and Growth Areas Digital Wealth Integration underway – branding under Ally expected 1Q 17 Management Aligns with strengths of deposit business Expect to launch direct-to-consumer product in 4Q 16 Mortgage Cornerstone product that provides long-term growth upside Cas
Slide 10: Strategic Benefits of Product Expansion
Strategic Benefits of Product Expansion P Support brand awareness and customer retention P Drive consistent deposit growth P Minimize deposit beta P Diversify revenue P Drive additional, capital efficient fee income P Provide long runway for EPS growth P Align company with growth trends in digital f
Slide 11: Dealer Financial Services Progression
Dealer Financial Services Progression Leading full service, full spectrum auto lender • Notable competitive advantages: − In business since 1919 − Broad product suite – new, used, super prime to subprime, lease, commercial, insurance, SmartAuction − Differentiated approach to service – Relentless Al
Slide 12: Improving Returns in Auto Finance Business
Improving Returns in Auto Finance Business Improving risk-adjusted margin in retail auto loan portfolio • Net financing revenue growth ~1.8x provision expense over the comparable last 12 months – Provision expense impact also driven by higher outstanding loan balance and increase in coverage ratio L
Slide 13: Optimizing Risk-Adjusted Yields
Optimizing Risk-Adjusted Yields(3) • Higher yields from optimizing mix and pricing actions have more than offset higher expected loss rates, even if losses increase beyond expectations • We expect loans to remain profitable over the life of the loan – even in a Great Recession type stress Estimated
Slide 14: Tangible Drivers of EPS Growth
Tangible Drivers of EPS Growth • Unsecured debt maturities – $12 billion over next 4 years • Deposit growth provides fuel for smart asset growth • Wealth management and mortgage origination fee growth • Optimizing returns in retail loan book • Repurchasing shares at significant discount • Eliminated
Slide 15: EPS Growth Comparison
EPS Growth Comparison Focused on delivering long runway of strong EPS growth Last 12 Months (LTM) ending 9/30/16 vs. comparable LTM - Adjusted EPS Growth 21.1% 14.6% 13.2% 7.0% 3.3% 3.2% 2.2% 1.8% 0.8% 0.8% 0.6% 0.6% -0.6% -1.7% -1.7% -1.9% -2.8% -6.9% -9.3% -14.7% (1) RF CFG ALLY MTB DFS STI USB JP
Slide 16: Conclusion: Strategic Priorities
Conclusion: Strategic Priorities Strategy: Build the leading modern, digital financial services company 1 Significantly grow deposit customer base − Reduce capital markets funding − More customers to offer new products − Ultimately lowers deposit beta and allows for pricing optimization 2 Successf
Slide 17: Supplemental
Supplemental CONFIDENTIAL 17
Slide 18: Notes on non-GAAP and other financial measures
Supplemental Notes on non-GAAP and other financial measures The following are non-GAAP financial measures which Ally believes are important to the reader of the Consolidated Financial Statements, but which are supplemental to and not a substitute for U.S. GAAP measures: Adjusted Earnings per Share (
Slide 19: Third Quarter Financial Results
Supplemental Third Quarter Financial Results Increase / (Decrease) vs. ($ millions except per share data) 3Q 16 2Q 16 3Q 15 2Q 16 3Q 15 (1) Net financing revenue (excld OID) $ 1,011 $ 998 $ 981 $ 13 $ 29 OID expense (15) (14) (11) (1) (3) Net financing revenue (as reported) 996 984 970 12 26 Total o
Slide 20: Net Interest Margin
Supplemental Net Interest Margin • Net Interest Margin (“NIM”) of 2.69% up 5 bps YoY driven by higher retail auto yields • NIM (excluding OID) (1) of 2.73% up 6 bps YoY • Increased asset sensitivity during 3Q Net Interest Margin ($ millions) 3Q 16 2Q 16 3Q 15 Average Average Average Balance Yield Ba
Slide 21: Significant Savings as Unsecured Debt Declines
Supplemental Significant Savings as Unsecured Debt Declines Attractive uses of $12+ billion of annual deposit growth expected to drive higher net interest income • Significant amount of unsecured long-term debt maturities over the next several years • Expect significant decline in unsecured debt foo
Slide 22: Illustrative View of Potential Deposit Growth Value
Supplemental Illustrative View of Potential Deposit Growth Value Deposit Growth next 3-4 years Attractive Uses Incremental Profits $40+ billion 2.0%+ Contribution Margin on average $800+ million Incremental Revenue Retire Unsecured Debt ~$1.20-$1.40 of Retail incremental annual Reduce Secure
Slide 23: Auto Finance – Key Metrics
Supplemental Auto Finance – Key Metrics Consumer Originations Origination Mix ($ billions; % of $ originations) (% of $ originations) $10.8 $11.1 37% 35% 37% 45% 43% 40% $9.3 $9.0 $9.4 $9.3 32% 32% 9% 9% 11% 33% 9% 11% 37% 37% 36% 9% 24% 24% 26% 28% 29% 48% 49% 49% 26% 45% 46% 48% 45% 45% 40% 37% 35
Slide 24: GAAP to Core Results
Supplemental GAAP to Core Results Adjusted Earnings per Share ("Adjusted EPS") QUARTERLY TREND 3Q 16 2Q 16 1Q 16 4Q 15 3Q 15 Numerator ($ millions) GAAP net income available to common shareholders $ 209 $ 345 $ 235 $ (953) $ 230 less: Disc Ops, net of tax 52 (3) (3) 13 5 add back : Original issue di
Slide 25: GAAP to Core Results
Supplemental GAAP to Core Results Core Return on Tangible Common Equity ("Core ROTCE") QUARTERLY TREND 3Q 16 2Q 16 1Q 16 4Q 15 3Q 15 Numerator ($ millions) GAAP net income available to common shareholders $ 209 $ 345 $ 235 $ (953) $ 230 less: Disc Ops, net of tax 52 (3) (3) 13 5 add b ack: Original
Slide 26: GAAP to Core Results
Supplemental GAAP to Core Results Adjusted Efficiency Ratio QUARTERLY TREND 3Q 16 2Q 16 1Q 16 4Q 15 3Q 15 Numerator ($ millions) Total noninterest expense $ 735 $ 773 $ 710 $ 668 $ 674 less: Rep and warrant expense (2) (3) (1) (2) (3) less: Insurance expense 222 293 218 201 209 less: Repositioning i
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