Ally Financial Inc. · NYSE:ALLY
Ally Financial — Q1 2020 Earnings Presentation
37 slides from Ally Financial's earnings presentation, Apr 20, 2020
Slide 1: Ally Financial Inc. 1Q 2020 Earnings Review
Ally Financial Inc. 1Q 2020 Earnings Review April 20, 2020 1Q 2020 Preliminary Results Contact Ally Investor Relations at (866) 710-4623 or investor.relations@ally.com 1
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) 1Q 20 4Q 19 3Q 19 2Q 19 1Q 19 GAAP net (loss) income attributable to common shareholders ("NIAC") $ (319) $ 378 $ 381 $ 582 $ 374 (1)(2) Core net (loss) income attributable to common shareholders $ (166) $ 364 $ 396 $ 387 $ 325 GAA
Slide 4: COVID-19: Ally’s Immediate Response
COVID-19: Ally’s Immediate Response Ally Implemented Actions Reflective of Our Purpose, Culture and Values • Decisive, timely efforts aimed at protecting well-being of our employees and contractors Our • Nearly 100% of workforce currently enabled to work-from-home People • Well-being: COVID testing,
Slide 5: 1Q 2020 Highlights
1Q 2020 Highlights Ally Began 2020 With Strong Momentum | Well Positioned to Navigate Environment > Adjusted EPS(1) of $(0.44) | Core ROTCE(1) of (5.4)% ▪ Results include $903 million provision expense | Reserve increase reflects COVID-related macroeconomic impacts ▪ Adjusted total net revenue(1) of
Slide 6: Core Metric Trends
Core Metric Trends Adjusted Earnings Per Share(1) Adjusted Total Net Revenue(2) $0.97 $1.01 $0.95 ($ millio ns) $0.91 $0.92 $1,620 $1,622 $1,606 $0.83 $0.80 $1,556 $1,557 $1,521 $1,535 $0.70 $0.68 $1,492 $424 $0.65 $1,472 $1,480 $1,463 $1,471 $458 $451 $0.58 $393 $396 $393 $392 $0.48 $1,391 $381 $37
Slide 7: Current Business Trends and 2020 Perspectives
Current Business Trends and 2020 Perspectives Well Positioned to Navigate Evolving Environment Focused on Driving Long-term Value • Jan / Feb 2020: Operating, credit and financial trends were strong and aligned with expectations Trends in March + Current Positioning Forward-looking Views > Focused o
Slide 8: Ally: Funding and Liquidity Position
Ally: Funding and Liquidity Position Ally’s solid deposit trends and robust liquidity reflect deliberate positioning Ally: Funding Composition Trends Ally: Liquidity Sources and Profile ($ billions) ($ billions) (2) (1) Deposits Secured Debt FHLB / Other Unsecured Debt Highly Liquid Securities Cash
Slide 9: Ally: Capital and Reserves
Ally: Capital and Reserves Solid capital levels and increased reserves provide significant loss absorption buffer Ally: CET1 Trends and Composition Ally: Reserve Levels & Composition ($ billions) ($ billions) 4.5% CET1 minimum CET1 > 4.5% minimum Reserve - $ Reserve - % CET1 % 9.5% 9.4% 9.3% 9.3% 2.
Slide 10: First Quarter 2020 Financial Results
First Quarter 2020 Financial Results ($ millions; except per share data) Increase / (Decrease) vs. 1Q 20 4Q 19 1Q 19 4Q 19 1Q 19 (1) Net financing revenue (excluding Core OID) $ 1,154 $ 1,164 $ 1,139 $ (10) $ 16 Core OID (8) (8) (7) (0) (2) Net financing revenue (as reported) $ 1,146 $ 1,156 $ 1,132
Slide 11: Balance Sheet and Net Interest Margin
Balance Sheet and Net Interest Margin ($ millions) 1Q 20 4Q 19 1Q 19 Average Average Average Balance Yield Balance Yield Balance Yield NOTE: ~11 bps of timing-related Retail Auto Loan impact due to system conversion $ 72,550 6.54% $ 72,626 6.68% $ 70,981 6.47% Retail Auto Loan (excl. hedge impact) 6
Slide 12: Deposits
Deposits • Deposits of $122.3 billion, up $9.0 billion or 8% YoY Retail Deposit Balance Growth – Retail deposits at $106.1 billion, up $2.3 billion QoQ, Deposit Levels (EOP) and Customer Retention Rate despite record brokerage outflows (exceeded FY’19 levels) ($ billions) $119.2 $120.8 $122.3 $116.3
Slide 13: Capital Ratios & Shareholder Distributions
Capital Ratios & Shareholder Distributions • Preliminary Basel III CET1 ratio of 9.3% Capital Ratios and Risk-Weighted Assets – Ally elected to defer the estimated impact of CECL on regulatory capital for a two-year period per interim final 12.7% 12.8% 12.8% 12.8% 12.5% rule issued by U.S. banking a
Slide 14: Asset Quality: Key Metrics
Asset Quality: Key Metrics Consolidated Net Charge-Offs Net Charge-off Activity ($ millions) Net Charge-Offs 1Q 19 2Q 19 3Q 19 4Q 19 1Q 20 0.91% 0.85% 0.83% 0.84% Retail Auto $ 234 $ 172 $ 253 $ 271 $ 262 0.75% 0.73% 0.57% 0.56% Commercial Auto 0 1 1 10 2 305% Mortgage Finance 0 (0) 0 0 (0) 175% 133
Slide 15: Asset Quality: Coverage & CECL
Asset Quality: Coverage & CECL • Upon CECL implementation on 1/1/2020, Ally consolidated reserves grew by $1.3 billion to 2.03% – Primarily driven by retail auto portfolio reserve increases • 1Q 2020 growth in reserves reflects deterioration in COVID-19 related macroeconomic forecast Consolidated Al
Slide 16: Retail Auto: COVID-19 Relief Program Summary
Retail Auto: COVID-19 Relief Program Summary • Comprehensive relief aligned with our relentless customer focus • Actions provide flexibility and better enhance ability of our customers to meet their financial needs • Existing customers able to defer payment for up to 120 days (no late fees charged;
Slide 17: Auto Finance – Results
Auto Finance – Results • Pre-tax loss of $173 million, down $502 million YoY Increase/(Decrease) vs. and down $574 million QoQ Key Financials ($ millions) 1Q 20 4Q 19 1Q 19 Net financing revenue $ 1,040 $ (21) $ 60 – Net financing revenue increased YoY due to higher retail Total other revenue 47 (14
Slide 18: Auto Finance – Key Metrics
Auto Finance – Key Metrics Consumer Originations Origination Mix ($ billions; % of $ originations) (% of $ originations) 692 688 685 688 691 686 $9.2 $9.7 $9.3 $9.1 52% 56% 54% 50% 49% 55% $8.2 $8.1 49% 50% 46% 44% 50% 47% 10% 11% 14% 14% 10% 13% 26% 25% 25% 28% 29% 26% 38% 34% 35% 37% 36% 32% 10% 1
Slide 19: Insurance
Insurance • Pre-tax loss of $105 million, down $250 million YoY Increase/(Decrease) vs. and down $219 million QoQ Key Financials ($ millions) 1Q 20 4Q 19 1Q 19 – Results negatively impacted by unrealized loss on Premiums, service revenue earned and other $ 279 $ (9) $ 14 available-for-sale equity se
Slide 20: Corporate Finance
Corporate Finance • Pre-tax loss of $68 million, down $81 million YoY and Increase/(Decrease) vs. down $118 million QoQ Key Financials ($ millions) 1Q 20 4Q 19 1Q 19 • Core pre-tax loss(1) of $64 million, down $73 million Net financing revenue $ 68 $ 4 $ 14 YoY and down $114 million QoQ Adjusted tot
Slide 21: Mortgage Finance
Mortgage Finance • Pre-tax income of $12 million, down $1 million YoY Increase/(Decrease) vs. and up $10 million QoQ Key Financials ($ millions) 1Q 20 4Q 19 1Q 19 – Total net revenue down YoY, reflecting faster prepayments, Net financing revenue $ 38 $ 2 $ (12) higher premium amortization Total othe
Slide 22: CEO Perspectives
CEO Perspectives 1 Environment is challenging, and unlike anything encountered 2 We recognize considerable uncertainty will remain for period of time and it remains difficult to predict when confidence will return 3 Ally will continue to rely on our values and strong culture. We will ‘Do It Right’ f
Slide 23: Conclusion
Conclusion Relentless Customer Focus and ‘Do It Right’ Culture Ongoing optimization of market leading Auto Lending and Insurance business lines Consumer & Commercial Sustained growth in customers and optimization Savings & Insurance of deposit funding profile Checking Grow expanded consumer product
Slide 24: Supplemental
Supplemental 1Q 2020 Preliminary Results 24
Slide 25: Results by Segment
Supplemental Results by Segment Pre-Tax (Loss) / Income ($ millions) 1Q 20 4Q 19 1Q 19 Automotive Finance $ (173) $ 401 $ 329 Insurance (105) 114 145 Dealer Financial Services $ (278) $ 515 $ 474 Corporate Finance (68) 50 13 Mortgage Finance 12 2 13 Corporate and Other (77) (80) (14) Pre-tax (loss)
Slide 26: Funding
Supplemental Funding • Ally’s deposit portfolio growth has consistently Ally Financial Ratings Details reduced reliance on wholesale funding markets LT Debt ST Debt Outlook Date • Ally has access to numerous funding sources, and Fitch BBB- F3 Stable 8/19/2019 is committed to maintaining access to th
Slide 27: Corporate and Other
Supplemental Corporate and Other • Corporate and Other includes the impact of Increase/(Decrease) vs. centralized asset and liability management, Key Financials ($ millions) 1Q 20 4Q 19 1Q 19 corporate overhead allocation activities, the Net financing (loss) $ (14) $ 4 $ (50) legacy mortgage portfol
Slide 28: Interest Rate Sensitivity
Supplemental Interest Rate Sensitivity Net Financing Revenue Impacts (1): Baseline vs. Forward Curve 1Q 20 4Q 19 (2) (2) ($ millions) Gradual Instantaneous Gradual Instantaneous -100 bps (3) $ (38) $ (69) $ 17 $ 67 +100 bps $ 70 $ 133 $ (1) $ 7 Stable rate environment n/m $ 25 n/m $ 13 (1) Net finan
Slide 29: Deferred Tax Asset
Supplemental Deferred Tax Asset Deferred Tax (Liability) / Asset 1Q 20(1) 4Q 19 ($ millions) Gross DTA/(DTL) Valuation Net DTA/(DTL) Net DTA/(DTL) Balance Allowance Balance Balance Net Operating Loss (Federal) $ 7 $ - $ 7 $ 7 Tax Credit Carryforwards 1,628 (748) 880 1,047 State/Local Tax Carryforwar
Slide 30: 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 31: Notes on Non-GAAP and Other Financial Measures
Supplemental Notes on Non-GAAP and Other Financial Measures 12) Estimated impact of CECL on regulatory capital per interim final rule issued by U.S. banking agencies - In December 2018, the FRB and other U.S. banking agencies approved a final rule to address the impact of CECL on regulatory capital
Slide 32: GAAP to Core Results: Adjusted EPS - Quarterly
Supplemental GAAP to Core Results: Adjusted EPS - Quarterly Adjusted Earnings per Share ("Adjusted EPS") QUARTERLY TREND 1Q 20 4Q 19 3Q 19 2Q 19 1Q 19 4Q 18 3Q 18 2Q 18 1Q 18 4Q 17 3Q 17 2Q 17 1Q 17 Numerator ($ millions) GAAP net (loss) income attributable to common shareholders $ (319) $ 378 $ 381
Slide 33: GAAP to Core Results: Adjusted TBVPS - Quarterly
Supplemental GAAP to Core Results: Adjusted TBVPS - Quarterly Adjusted Tangible Book Value per Share ("Adjusted TBVPS") QUARTERLY TREND 1Q 20 4Q 19 3Q 19 2Q 19 1Q 19 4Q 18 3Q 18 2Q 18 1Q 18 4Q 17 3Q 17 2Q 17 1Q 17 Numerator ($ billions) GAAP common shareholder's equity $ 13.5 $ 14.4 $ 14.5 $ 14.3 $
Slide 34: GAAP to Core Results: Core ROTCE - Quarterly
Supplemental GAAP to Core Results: Core ROTCE - Quarterly Core Return on Tangible Common Equity ("Core ROTCE") QUARTERLY TREND 1Q 20 4Q 19 3Q 19 2Q 19 1Q 19 Numerator ($ millions) GAAP net (loss) income attributable to common shareholders $ (319) $ 378 $ 381 $ 582 $ 374 Discontinued operations, net
Slide 35: GAAP to Core Results: Adjusted Efficiency Ratio - Quarterly
Supplemental GAAP to Core Results: Adjusted Efficiency Ratio - Quarterly Adjusted Efficiency Ratio QUARTERLY TREND 1Q 20 4Q 19 3Q 19 2Q 19 1Q 19 Numerator ($ millions) GAAP noninterest expense $ 920 $ 880 $ 838 $ 881 $ 830 Rep and warrant expense - - (0) (0) - Insurance expense (256) (238) (247) (30
Slide 36: Notes on Non-GAAP and Other Financial Measures
Supplemental Notes on Non-GAAP and Other Financial Measures ($ millions) 1Q 20 4Q 19 1Q 19 Change in the Change in the Change in the fair value of fair value of fair value of GAAP Core OID Non-GAAP (1) GAAP Core OID Non-GAAP (1) GAAP Core OID Non-GAAP (1) equity equity equity securities securities s
Slide 37: Notes on Non-GAAP and Other Financial Measures
Supplemental Notes on Non-GAAP and Other Financial Measures Net Financing Revenue (ex. Core OID) QUARTERLY TREND ($ millions) 1Q 20 4Q 19 3Q 19 2Q 19 1Q 19 4Q 18 3Q 18 2Q 18 1Q 18 4Q 17 3Q 17 2Q 17 1Q 17 GAAP Net Financing Revenue $ 1,146 $ 1,156 $ 1,188 $ 1,157 $ 1,132 $ 1,140 $ 1,107 $ 1,094 $ 1,0