Ally Financial Inc. · NYSE:ALLY
Ally Financial — Q2 2014 Earnings Presentation
23 slides from Ally Financial's earnings presentation, Jul 29, 2014
Slide 1: Ally Financial Inc. 2Q Earnings Review
Ally Financial Inc. 2 Q Earnings Review Contact Ally Investor Relations at (866) 710 - 4623 or investor.relations@ally.com July 29, 2014
Slide 2: Forward-Looking Statements and Additional Information
2 2Q 2014 Preliminary Results Forward - Looking Statements and Additional Information The following should be read in conjunction with the financial statements, notes and other information contained in the Compa ny’ s Annual Reports on Form 10 - K, Quarterly Reports on Form 10 - Q, and Current Repor
Slide 3: Second Quarter Highlights
3 2Q 2014 Preliminary Results Second Quarter Highlights • Net income of $323 million and EPS of $0.54 – Core pretax income excluding repositioning items (1) of $417 million, and Adjusted EPS (2) of $0.42 – Results reflect continued strong lease performance and favorable credit trends – Strong result
Slide 4: Second Quarter Financial Results
4 2Q 2014 Preliminary Results ($ millions except EPS or as noted) 2Q 14 1Q 14 2Q 13 1Q 14 2Q 13 Net financing revenue (1) 912$ 865$ 689$ 47$ 223$ Total other revenue (1) 372 321 411 51 (38) Provision for loan losses 63 137 89 (74) (26) Total noninterest expense 805 710 799 95 6 Core pre-tax income,
Slide 5: Results by Segment
5 2Q 2014 Preliminary Results Pre-Tax Income ($ millions) 2Q 14 1Q 14 2Q 13 Automotive Finance 461$ 122$ 79$ Insurance (23) (97) (68) Dealer Financial Services 438$ 25$ 11$ Mortgage 27 10 54 Corporate and Other (1) (48) 43 141 Core pre-tax income, ex. repositioning (2) 417$ 78$ 205$ Increase/(Decrea
Slide 6: Net Interest Margin
6 2Q 2014 Preliminary Results Net Interest Margin • Net Interest Margin (“NIM”) (1) improved 10 bps QoQ and 59 bps YoY – Cost of funds (1) declined 63 bps YoY driven primarily by the redemption of legacy high - cost callable debt and continued growth in deposits ▪ Increase QoQ driven by redemption o
Slide 7: Ally Bank Deposit Franchise
7 2Q 2014 Preliminary Results Ally Bank Deposit Levels ($ billions) $39.9 $41.7 $43.2 $45.2 $45.9 $49.4 $51.4 $52.8 $54.9 $55.6 2Q 13 3Q 13 4Q 13 1Q 14 2Q 14 Ally Bank Retail Ally Bank Brokered Ally Bank Deposit Franchise • Continued franchise momentum with almost $46 billion of retail deposits • $0
Slide 8: Expenses
8 2Q 2014 Preliminary Results ($ millions) 2Q 14 1Q 14 2Q 13 1Q 14 2Q 13 Compensation and benefits 216$ 254$ 249$ (38)$ (33)$ Technology and communications 93 85 89 9 4 Professional services 25 28 38 (2) (13) Servicing expenses (1) 53 46 45 6 8 Advertising and marketing 25 29 28 (5) (4) Other contro
Slide 9: Capital
9 2Q 2014 Preliminary Results Capital • Tier 1 Common capital increased in the quarter driven primarily by: – $258 million of net income available to common – $155 million decrease in disallowed DTA • Tier 1 Common ratio of 9.4%, up 25 bps QoQ and 139 bps YoY – Estimated fully phased - in Basel III
Slide 10: Asset Quality
10 2Q 2014 Preliminary Results 263% 287% 238% 234% 224% 344% 0.46% 0.42% 0.53% 0.53% 0.53% 0.34% 1Q 13 2Q 13 3Q 13 4Q 13 1Q 14 2Q 14 ALLL as % of Annualized NCOs Annualized NCO Rate $1,192 $1,208 $1,198 $1,183 $1,197 $1,171 ALLL Balance ($M) Consolidated Net Charge - Offs U.S. Commercial Auto Net Ch
Slide 11: Automotive Finance Key Financials
11 2Q 2014 Preliminary Results Key Financials ($ millions) 2Q 14 1Q 14 2Q 13 Net financing revenue 884$ 64$ 107$ Total other revenue 62 (2) 2 Total net revenue 946 62 109 Provision for loan losses 99 (60) 11 Noninterest expense 386 - 19 Pre-tax income from continuing ops 461$ 122$ 79$ U.S. auto earn
Slide 12: Auto Finance – Key Metrics
12 2Q 2014 Preliminary Results ($ billions) $32.0 $30.3 $28.1 $31.6 $32.6 $32.9 1Q 13 2Q 13 3Q 13 4Q 13 1Q 14 2Q 14 (EOP $ billions) $69.8 $72.1 $73.7 $74.1 $74.9 $76.9 1Q 13 2Q 13 3Q 13 4Q 13 1Q 14 2Q 14 ($ billions; % of $ originations) $9.7 $9.8 $9.6 $8.2 $9.2 $10.9 61% 64% 69% 66% 66% 63% 13% 15
Slide 13: Insurance
13 2Q 2014 Preliminary Results Dealer Products & Services Written Premiums ($ millions) $260 $267 $236 $233 $276 $267 $225 $244 $267 2Q 12 3Q 12 4Q 12 1Q 13 2Q 13 3Q 13 4Q 13 1Q 14 2Q 14 Key Financials ($ millions) 2Q 14 1Q 14 2Q 13 Insurance premiums, service revenue earned and other 252$ 8$ (11)$
Slide 14: Corporate and Other and Mortgage Key Financials
14 2Q 2014 Preliminary Results Key Financials ($ millions) 2Q14 1Q14 2Q13 Net financing revenue (ex. OID) 0$ (16)$ 118$ Total other revenue (ex. OID) 11 30 (12) Provision for loan losses (11) (12) (6) Noninterest expense 71 (16) (27) Core pre-tax loss (1) (48)$ 43$ 141$ OID amortization expense (2)
Slide 15: Summary and Outlook
15 2Q 2014 Preliminary Results Summary and Outlook • Strong performance in the auto finance business – $10.9 billion of auto originations – Strong used vehicle prices and higher termination volumes continued to benefit lease performance • Continuing to strengthen our leading d irect bank franchise w
Slide 16: Supplemental Charts
Supplemental Charts
Slide 17: Second Quarter Financial Results (Supplemental)
17 2Q 2014 Preliminary Results ($ millions) 2Q 14 1Q 14 2Q 13 1Q 14 2Q 13 Net financing revenue (1) 912$ 865$ 689$ 47$ 223$ Total other revenue (1) 372 321 411 51 (38) Provision for loan losses 63 137 89 (74) (26) Controllable expenses (2) 458 487 498 (29) (40) Other noninterest expenses 347 223 301
Slide 18: Funding
18 2Q 2014 Preliminary Results ($ in millions) Average Outstanding Balance (1) Quarterly Interest Expense Annualized Cost of Funds LT Unsecured Debt 25,367$ 377$ 5.96% Secured Debt 40,843 123 1.21% Other Borrowings (2) 9,129 16 0.70% Deposits 55,626 166 1.20% Total / Weighted Average 130,965$ 682$ 2
Slide 19: Liquidity Supplemental
19 2Q 2014 Preliminary Results Liquidity Supplemental (1) Parent company liquidity is defined as our consolidated operations less Ally Bank and the regulated subsidiaries of Ally Insu ran ce’s holding company (2) May include the restricted cash accumulation for retained notes maturing within the fol
Slide 20: Discontinued Operations Supplemental
20 2Q 2014 Preliminary Results Impact of Discontinued Operations ($ millions) 2Q 14 1Q 14 2Q 13 Auto Finance 22$ (6)$ 267$ Insurance 1 1 (293) Corporate and Other (1) 25 26 1,718 Consolidated pre-tax income 48$ 20$ 1,691$ Tax expense 7 9 624 Consolidated net income 40$ 11$ 1,067$ Increase/(Decrease)
Slide 21: Deferred Tax Asset Supplemental
21 2Q 2014 Preliminary Results Deferred Tax Asset Supplemental (1) U.S. GAAP does not prescribe a method for calculating individual elements of deferred taxes for interim periods. Therefore, these ba lances are estimated (2) Primarily book / tax timing differences • DTA utilization resulted in less
Slide 22: Notes on non-GAAP and other financial measures
22 2Q 2014 Preliminary Results Notes on non - GAAP and other financial measures Supplemental (1) Represents core pre - tax income excluding repositioning items. See slide 23 for definitions $ in millions GAAP OID & Repositioning Items Non-GAAP (1) GAAP OID & Repositioning Items Non-GAAP (1) GAAP OID
Slide 23: Notes on non-GAAP and other financial measures
23 2Q 2014 Preliminary Results Notes on non - GAAP and other financial measures Supplemental 1) Core pre - tax income (loss) is a non - GAAP financial measure. It is defined as income (loss) from continuing operations before taxes and primarily bond exchange original issue discount ("OID") amortizat