Slide 1: Ally Financial Inc. 2Q10 Earnings Review
Ally Financial Inc. 2Q10 Earnings Review August 3, 2010 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 2009 Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K. This information i
Slide 3: Second Quarter Highlights
Second Quarter Highlights Ally earned core pre-tax income (1) of $738 million and net income of $565 million in the second quarter Premier Auto Finance Provider Capital Markets Mortgage Risk Cost Structure Deposits Bank Holding Company Strong auto franchise is the #1 provider of new car financing in
Slide 4: Auto Franchise Momentum
Auto Franchise Momentum Ally will continue to leverage competitive advantages to evolve as a leading market driven competitor Uniquely positioned with long-standing dealer relationships and over 90 years of industry experience Leading provider across a full spectrum of products for dealers and their
Slide 5: GM/Chrysler Consumer Sales Financed and Penetration
-39% 22.5% 14.4% 13.8% - Next 5 Largest Competitors -44% 7.8% 4.8% 4.4% - Next Largest Competitor % of GM/Chrysler Consumer Sales Financed by: 124% 17.0% 27.7% 38.1% % of GM/Chrysler Consumer Sales Financed by Ally 107% 189,767 314,541 392,484 # of New GM/Chrysler Vehicles Financed for Consumers by
Slide 6: Auto Finance Products
Auto Finance Products Given its broad market presence, Ally is a top four player in the new car subprime space Ally has placed more emphasis on the higher end of the subprime spectrum No #1 13% of Ally’s U.S. originations have a credit score of less than 660 Approximately 2% are less than 620 Nonpri
Slide 7: General Motors Relationship
General Motors Relationship General Motors and Ally maintain an important, mutually beneficial relationship Ally and GM work together to develop attractive subvention programs for retail products Ally remains committed to assisting GM in its mission to sell vehicles Ally is the #1 provider for all r
Slide 8: Leasing Dynamics
Leasing Dynamics Ally continues to be the #1 provider of leasing to GM and Chrysler Lease payments are primarily driven by residual value expectations Residual value expectations are set by third party lease guides, such as ALG Monthly payments can be managed through contractual residual values and
Slide 9: Second Quarter 2010 Results Key Statistics
Second Quarter 2010 Results Key Statistics ($ millions) 2Q 10 1Q 10 2Q 09 1Q 10 2Q 09 Total net revenue (ex. OID) 2,392 $ 2,251 $ 1,535 $ 141 $ 857 $ Provision for loan losses 220 146 1,117 74 (897) Controllable expenses (1) 862 933 986 (71) (124) Other noninterest expenses 572 594 740 (22) (168) To
Slide 10: Results by Segment
Results by Segment All four operating segments were profitable for the second straight quarter Global Automotive Services : Robust growth in retail originations and continued improvement in credit trends Mortgage Operations : Strong margins and sales of legacy assets combined with favorable servicin
Slide 11: Outlook
Outlook Ally expects to sustain positive core income going forward Certain positive factors currently contributing to earnings may moderate over the coming quarters Auto forward flow gain on sales ($66mm in 2Q; $113mm in 1Q) Lease portfolio remarketing gains due to all-time high used car prices ($20
Slide 12: Asset Quality Summary
Asset Quality Summary Credit quality continued its favorable trend QoQ Nonperforming loans decreased driven by continued resolution of legacy portfolios and improving dealer performance, partially offset by seasoning within the consumer mortgage portfolio Accruing delinquencies remained stable benef
Slide 13: Global Automotive Services
Global Automotive Services Global Automotive Services earned $843 million of pre-tax income from continuing operations in 2Q Sixth consecutive profitable quarter from core auto business North American Operations continued to drive results and International Operations performance improved Robust grow
Slide 14: North American Automotive Finance
North American Automotive Finance North American segment reported pre-tax income of $630 million Impacted by shrinking lease portfolio Lower gain on sale revenue Strong growth in originations, with consumer penetration of both GM and Chrysler sales continuing to increase U.S. used vehicle originatio
Slide 15: International Automotive Finance
International Operations earned $105 million of pre- tax income compared to $42 million in 1Q Non-interest expense down due to foreign exchange and release of local tax reserves Provision expense down due to improving asset quality Another strong quarter of originations in China and Brazil Brazil up
Slide 16: Global Auto Finance – Consumer Credit Trends
Global Auto Finance – Consumer Credit Trends Delinquency trends remained relatively stable in the second quarter Reflective of improved collection processes, more stable economic conditions and increased quality of newer vintages Excluding the Nuvell portfolio, delinquencies continued to fall in the
Slide 17: Global Auto Finance - Credit Allowance Coverage Ratios
Global Auto Finance - Credit Allowance Coverage Ratios North American consumer coverage ratio decreased in the second quarter Decrease primarily driven by a change in the asset mix as a result of continued runoff of our liquidating portfolios and improved credit quality trends Coverage ratio remains
Slide 18: Insurance
Insurance Segment streamlined to focus primarily on dealer-centric products Dealer Products and Services (“DP&S”): Offers extended service contracts and dealer inventory insurance International: Includes the ABA Seguros (“ABA”) and CarCare Plan (“CCP”) businesses Written premiums up in DP&S driven b
Slide 19: Mortgage Operations
Mortgage Operations Mortgage Operations reported pre-tax income from continuing operations of $230 million in the second quarter Second quarter production was $13.5 billion, up slightly from 1Q Gain on sale from originations was $134 million, up from $86 million in 1Q as margins continue to remain f
Slide 20: Mortgage Operations Asset Roll Forward
Mortgage Operations Asset Roll Forward Continued streamlining to focus on the origination and servicing business with the resolution of legacy assets 3/31/2010 Quarterly Activity 6/30/2010 Pending European Actions Pro-Forma ResCap, LLC Assets Cash and Cash Equivalents 0.7 $ (0.1) $ 0.6 $ 0.6 $ Accou
Slide 21: Mortgage Operations - Credit Allowance Coverage Ratios
Mortgage Operations - Credit Allowance Coverage Ratios Allowance balance and HFI portfolio down from prior year driven by strategic actions taken in 2009 Consumer coverage up slightly as HFI portfolio seasons and performs in line with expectations Commercial coverage down relative to prior periods a
Slide 22: Corporate and Other
Corporate and Other Results in the segment reflect amortization of OID from bond exchanges Approximately $600 million of OID amortization expense remains for 2010, with expense moderating significantly after 2011 Favorability from prior quarter driven by Mark-to-market on deferred purchase price ass
Slide 23: Discontinued Operations
Discontinued Operations Continued streamlining operations with seven additional businesses sold in 2Q Asset sales generating gains driven by improved market conditions Sale of U.K. mortgage assets generated net gain of $93 million Sale of European mortgage business expected to close in 3Q10 Impact o
Slide 24: Liquidity
Liquidity 1) Ally utilizes a two-pronged funding strategy designed to support stable liquidity and diversify funding sources Cost efficient funding at Ally Bank Over 65% of new auto originations were funded at the bank level 2) Net bank deposits grew by $2.3 billion with strong CD retention rates Co
Slide 25: Deposits
Deposits Average CD Maturity and Rate Retail CD Balance Retention (1) (months) ($ billions) (1) Retention includes balances retained in any Ally Bank product 25.5 24.2 12.8 11.3 12.0 12.1 1.82% 2.00% 2.34% 2.59% 2.96% 3.41% 0.0 5.0 10.0 15.0 20.0 25.0 30.0 1Q 09 2Q 09 3Q 09 4Q 09 1Q 10 2Q 10 0.00% 1
Slide 26: Cost of Funds
Cost of Funds Ally’s total deposits as a percent of total interest bearing liabilities has increased from 13% in 4Q08 to 26% in 2Q10, driving cost of funds improvement Historical Portfolio Cost of Funds (1) (1) Reported amounts represent quarterly interest expense (excluding OID expense) divided by
Slide 27: Capital Ratios
Capital Ratios See slide 39 for further details on capital numbers stated above Capital levels up in 2Q driven by positive net income and reduction of risk weighted assets (“RWA”) RWA declined due to whole loan sales and continued amortization of the lease book, partially offset by increased auto or
Slide 28: Summary
Summary All four operating segments were profitable, along with Ally Bank and ResCap legal entities Credit trends continued to improve Continued progress reducing legacy mortgage risk Liquidity significantly strengthened Cost of funds advantage of deposit base materializing Second Quarter Progress C
Slide 29: Supplemental Charts
Supplemental Charts
Slide 30: Condensed Consolidated Income Statement
Condensed Consolidated Income Statement Supplemental ($ millions) 2Q 10 1Q 10 2Q 09 1Q 10 2Q 09 Total financing revenue and other interest income 2,902 $ 3,117 $ 3,389 $ (215) $ (487) $ Interest expense 1,664 1,705 1,940 (41) (276) Depreciation expense on operating lease assets 526 656 1,056 (130) (
Slide 31: North American Auto - Condensed Income Statement
North American Auto - Condensed Income Statement Supplemental ($ millions) 2Q 10 1Q 10 2Q 09 1Q 10 2Q 09 Total financing revenue and other interest income 1,943 $ 2,095 $ 2,292 $ (152) $ (349) $ Interest expense 568 575 573 (7) (5) Depreciation expense on operating lease assets (1) 486 607 990 (121)
Slide 32: International Auto - Condensed Income Statement
International Auto - Condensed Income Statement Supplemental ($ millions) 2Q 10 1Q 10 2Q 09 1Q 10 2Q 09 Total financing revenue and other interest income 422 $ 465 $ 565 $ (43) $ (143) $ Interest expense 209 234 311 (25) (102) Depreciation expense on operating lease assets 40 48 66 (8) (26) Net fina
Slide 33: Mortgage Operations - Condensed Income Statement
Mortgage Operations - Condensed Income Statement Supplemental ($ millions) 2Q 10 1Q 10 2Q 09 1Q 10 2Q 09 Total financing revenue and other interest income 456 $ 482 $ 510 $ (26) $ (54) $ Interest expense 302 300 373 2 (71) Net financing revenue 154 182 137 (28) 17 Servicing fees (1) 328 324 334 4 (6
Slide 34: Corporate and Other - Condensed Income Statement
Corporate and Other - Condensed Income Statement Supplemental ($ millions) 2Q 10 1Q 10 2Q 09 1Q 10 2Q 09 Net financing loss (1)(4) (529) $ (552) $ (714) $ 23 $ 185 $ Gain (loss) on mortgage and automotive loans, net - - (5) - 5 (Loss) gain on extinguishment of debt (2) (3) (118) 13 115 (16) Other in
Slide 35: Condensed Consolidated Balance Sheet
Condensed Consolidated Balance Sheet Supplemental ($ millions) 6/30/10 3/31/10 6/30/09 3/31/10 6/30/09 Cash and cash equivalents 14,348 $ 14,670 $ 18,655 $ (322) $ (4,307) $ Trading securities 209 144 783 65 (574) Investment securities 12,710 11,651 9,209 1,059 3,501 Loans held-for-sale 10,382 13,99
Slide 36: Supplemental Consumer Auto Credit Quality Data
Supplemental Consumer Auto Credit Quality Data Supplemental North American Loss Per Vehicle (Serviced Basis) $11,246 $10,398 $9,288 $9,635 $8,951 $8,495 $6,000 $8,000 $10,000 $12,000 1Q 09 2Q 09 3Q 09 4Q 09 1Q 10 2Q 10 Managed Loans > 30 Days Past Due North America Europe Latin America Global 2Q 10
Slide 37: Ally Bank HFI Portfolio
Ally Bank HFI Portfolio In conjunction with strategic actions taken in 4Q09, higher risk loans at Ally Bank were reclassified as held for sale, marked to a market based level, purchased by Ally Financial and contributed to ResCap As a result, the credit quality of Ally Bank’s remaining HFI portfolio
Slide 38: ResCap, LLC - Key Financial Information
ResCap, LLC - Key Financial Information ResCap, LLC met its covenants with tangible net worth of $793 million at the end of the second quarter (1) For the purpose of ResCap’s tangible net worth covenants, consolidated tangible net worth is defined as the company’s consolidated equity, excluding inta
Slide 39: Capital Measures
Capital Measures Supplemental Capital 6/30/2010 3/31/2010 Shareholders’ Equity 20.8 $ 20.5 $ Less: Goodwill and certain other intangibles (0.5) (0.5) Unrealized (gain) loss and other adjustments (0.4) (0.5) Add: Trust Preferred Securities 2.5 2.5 Total Tier 1 Capital 22.4 22.1 Total Tier 1 Capital 2
Slide 40: Unsecured Long-Term Debt Maturity Profile
Unsecured Long-Term Debt Maturity Profile Note: Scheduled maturities of ResCap unsecured long-term debt are as follows: $419 million in 2010; $208 million in 2011; $340 million in 2012; $529 million in 2013; $97 million in 2014; and $112 million in 2015 and thereafter. These maturities exclude ResCa
Slide 41: Ownership Structure
Ownership Structure Supplemental Common Ownership as of 6/30/2010 GM 6.7% GM Trust 9.9% 3rd Party Investors 12.2% Cerberus 14.9% US Treasury 56.3% ($ millions) Series Owner Liquidation Preference Book Value Trust Preferred Securities (1) U.S. Treasury $2,667.0 $2,540.0 Series F-2 Mandatory Convertib