Ally Financial Inc. · NYSE:ALLY
Ally Financial — Q1 2017 Earnings Presentation
30 slides from Ally Financial's earnings presentation, Apr 27, 2017
Slide 1: Ally Financial Inc. 1Q 2017 Earnings Review
Ally Financial Inc. 1Q 2017 Earnings Review April 27, 2017 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 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
GAAP and Core Results QUARTERLY TREND 1Q 17 4Q 16 3Q 16 2Q 16 1Q 16 GAAP net income available to common ("NIAC") $ 214 $ 248 $ 209 $ 345 $ 235 (1)(2) Core net income available to common $ 224 $ 256 $ 271 $ 263 $ 253 GAAP earnings per common share ("EPS")(diluted, NIAC) $ 0.46 $ 0.52 $ 0.43 $ 0.71 $
Slide 4: First Quarter Highlights
First Quarter Highlights Adjusted EPS(1) of 48 cents Record total deposit growth of $5.5 billion Remain cautious on auto environment but continue to see attractive risk/return opportunities − Estimated retail auto originated yield(2) of approximately 6.1% in 1Q, up from 5.3% in 1Q 15 − Solid l
Slide 5: Current Key Topics
Current Key Topics Dynamics Mitigating Factors • 1Q used vehicle values down 6.7% YoY per • Reducing residual value risk as lease Ally Index portfolio declines and skews towards more Used Vehicle trucks/SUVs • Higher volume of off-lease vehicles coming Price into market over next few years • Residua
Slide 6: First Quarter Financial Results
First Quarter Financial Results Increase / (Decrease) vs. ($ millions except per share data) 1Q 17 4Q 16 1Q 16 4Q 16 1Q 16 (1) Net financing revenue (excld OID) $ 995 $ 991 $ 964 $ 4 $ 32 OID expense (16) (15) (13) (1) (4) Net financing revenue (as reported) 979 976 951 3 28 Total other revenue 396
Slide 7: Core Metric Trend
Core Metric Trend Adjusted Earnings per Share(1) Adjusted Total Net Revenue(2) ($ millio ns) $1,372 $1,399 $1,383 $1,391 $1,353 $1,344 $1,284 $1,311 $1,301 $1,295 $1,313 $1,186 $1,205 $0.56 $388 $392 $396 $0.53 $0.54 $0.54 $332 $358 $380 $374 $0.52 $0.51 $0.52 $0.52 $372 $375 $368 $440 $0.46 $0.48 $
Slide 8: Net Interest Margin
Net Interest Margin • Net Interest Margin (“NIM”) of 2.60% • NIM (excluding OID)(1) of 2.64% up 1 bps YoY and 4 bps QoQ − Retail and Commercial auto balances and yields partially offsetting lease balance and yield decline − Expect more meaningful benefit in 2Q from unsecured maturities and continued
Slide 9: Deposits
Deposits • Record total deposits growth of $5.5 billion in 1Q 17 Stable, consistent growth of retail deposits – Retail deposits up $3.4 billion QoQ and $11.0 billion Deposit Levels (EOP) YoY ($ billions) $84.5 $79.0 $75.7 – Benefit of ~$1 billion of deposits from Ally Invest $70.3 $72.8 $12.4 $14.5
Slide 10: Capital
Capital Capital Ratios(1) and Risk-Weighted Assets Deferred Tax Asset Utilization ($ millions) 13.0% 12.8% 12.7% 12.7% 12.5% $1,130 11.5% $1,065 11.1% 11.1% 10.9% 11.0% 9.2% 9.3% 9.3% 9.3% $976 9.1% $948 $895 $826 $777 $134 $134 $136 $139 $138 $667 $683 $616 1Q 16 2Q 16 3Q 16 4Q 16 1Q 17 1Q 16 2Q 16
Slide 11: Asset Quality
Asset Quality Consolidated Net Charge-Offs Provision Expense ($ millions) 0.88% 0.86% 0.75% Provision Expense 4Q 15 1Q 16 2Q 16 3Q 16 4Q 16 1Q 17 0.72% 0.61% 0.64% Retail Auto $ 229 $ 207 $ 168 $ 269 $ 275 $ 267 0.54% Commercial Auto 7 2 2 1 - 1 0.39% Mortgage Finance (2) 3 - 1 (8) 1 244% Corporate
Slide 12: Auto Finance – Results
Auto Finance – Results • Auto Finance reported pre-tax income of $288 million Increase/(Decrease) vs. in 1Q, down $49 million YoY and down $10 million QoQ Key Financials ($ millions) 1Q 17 4Q 16 1Q 16 Net financing revenue $ 892 $ (15) $ (4) Total other revenue 101 23 24 – Net financing revenue lowe
Slide 13: Auto Finance – Key Metrics
Auto Finance – Key Metrics Consumer Originations Origination Mix ($ billions; % of $ originations) (% of $ originations) $9.3 $9.0 $9.4 $9.3 37% 40% $8.9 45% 43% 41% 48% $8.2 33% 37% 37% 36% 11% 36% 40% 9% 11% 8% 9% 10% 26% 28% 29% 26% 27% 28% 49% 46% 48% 50% 45% 42% 40% 37% 35% 35% 37% 32% 3% 1% 1%
Slide 14: Insurance
Insurance • Pre-tax income of $40 million, down $10 million YoY and Increase/(Decrease) vs. down $29 million QoQ Key Financials ($ millions) 1Q 17 4Q 16 1Q 16 Premiums, service revenue earned and other $ 244 $ - $ 10 – Weather losses up $16 million YoY and $32 million QoQ Losses and loss adjustment
Slide 15: Corporate Finance
Corporate Finance • Pre-tax income of $25 million, up $14 million YoY and down $6 million QoQ Increase/(Decrease) vs. Key Financials ($ millions) 1Q 17 4Q 16 1Q 16 – Net financing revenue up YoY driven by strong loan Net financing revenue $ 34 $ - $ 6 growth Total other revenue 18 6 12 Total net rev
Slide 16: Mortgage Finance
Mortgage Finance • Pre-tax income of $9 million, up $7 million YoY and Increase/(Decrease) vs. down $6 million QoQ Key Financials ($ millions) 1Q 17 4Q 16 1Q 16 Total net revenue $ 34 $ 8 $ 14 – Higher net financing revenue YoY driven by asset Provision for loan losses 1 9 (2) balance growth from bu
Slide 17: Conclusion – Plan for Driving Strong Shareholder Returns
Conclusion – Plan for Driving Strong Shareholder Returns Continue to optimize retail auto returns to ensure strong profitability through the cycle Demonstrate credit metrics are contained within a range Grow and solidify customer relationships to position for the long-term Deliver medium-ter
Slide 18: Supplemental Charts
Supplemental Charts
Slide 19: Results by Segment
Supplemental Results by Segment Pre-Tax Income Increase/(Decrease) vs. ($ millions) 1Q 17 4Q 16 1Q 16 Automotive Finance $ 288 $ (10) $ (49) Insurance 40 (29) (10) Dealer Financial Services $ 328 $ (39) $ (59) Mortgage Finance 9 (6) 7 Corporate Finance 25 (6) 14 Corporate and Other (36) (3) (33) Pre
Slide 20: Funding and Liquidity
Supplemental Funding and Liquidity • Bank funding at 75% up 4 pts YoY • Deposits at 58% of total funding (ex OID) up 7 pts YoY Growth in Bank Funded Assets • New secured funding in 1Q 17 ($ billions) $157.9 $157.4 $163.7 $162.1 $156.5 – $2.3 billion retail auto securitizations – $0.7 billion floorpl
Slide 21: Corporate and Other
Supplemental Corporate and Other • Corporate and Other includes the impact of centralized Increase/(Decrease) vs. asset and liability management, corporate overhead Key Financials ($ millions) 1Q 17 4Q 16 1Q 16 Net financing revenue (loss) $ 4 $ 12 $ 11 allocation activities, the legacy mortgage por
Slide 22: Interest Rate Sensitivity
Supplemental Interest Rate Sensitivity Net Financing Revenue Impact(1) vs. Forward Curve 1Q 17 4Q 16 Ally Modeled 50% Deposit Ally Modeled 50% Deposit $ million Scenario(2) Pass-Through Scenario(2) Pass-Through +100 bp Instantaneous $ (57) $ 43 $ (62) $ 77 +100 bp Gradual (over 12 months) $ (22) $ 2
Slide 23: Deferred Tax Asset
Supplemental Deferred Tax Asset Deferred Tax Asset 1Q 17 (1) 4Q 16 ($ millions) Gross DTA/(DTL) Valuation Net DTA/(DTL) Net DTA/(DTL) Balance Allowance Balance Balance Net Operating Loss (Federal) $ 848 $ - $ 848 $ 900 Capital Loss (Federal) 31 (31) - - Tax Credit Carryforwards 1,994 (484) 1,510 1,5
Slide 24: 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 25: GAAP to Core Results - Quarterly
Supplemental GAAP to Core Results - Quarterly Adjusted Earnings per Share ("Adjusted EPS") QUARTERLY TREND 1Q '17 4Q '16 3Q '16 2Q '16 1Q '16 4Q '15 3Q '15 2Q '15 1Q '15 4Q '14 3Q '14 2Q '14 1Q '14 Numerator ($ millions) GAAP net income available to common shareholders $ 214 $ 248 $ 209 $ 345 $ 235
Slide 26: GAAP to Core Results - Quarterly
Supplemental GAAP to Core Results - Quarterly Adjusted Tangible Book Value per Share ("Adjusted TBVPS") QUARTERLY TREND 1Q '17 4Q '16 3Q '16 2Q '16 1Q '16 4Q '15 3Q '15 2Q '15 1Q '15 4Q '14 3Q '14 2Q '14 1Q '14 Numerator ($ b illions) GAAP shareholder's equity $ 13.4 $ 13.3 $ 13.6 $ 13.6 $ 13.8 $ 13
Slide 27: GAAP to Core Results - Quarterly
Supplemental GAAP to Core Results - Quarterly Core Return on Tangible Common Equity ("Core ROTCE") QUARTERLY TREND 1Q 17 4Q 16 3Q 16 2Q 16 1Q 16 Numerator ($ millions) GAAP net income available to common shareholders $ 214 $ 248 $ 209 $ 345 $ 235 less: Disc Ops, net of tax (1) (2) 52 (3) (3) add b a
Slide 28: GAAP to Core Results - Quarterly
Supplemental GAAP to Core Results - Quarterly Adjusted Efficiency Ratio QUARTERLY TREND 1Q 17 4Q 16 3Q 16 2Q 16 1Q 16 Numerator ($ millions) Total noninterest expense $ 778 $ 721 $ 735 $ 773 $ 710 less: Rep and warrant expense (0) (0) (2) (3) (1) less: Insurance expense 239 207 222 293 218 less: Rep
Slide 29: Notes on non-GAAP and other financial measures
Supplemental Notes on non-GAAP and other financial measures Regulatory Capital - Basel III transition to fully phased-in ($ billions) 1Q 17 4Q 16 3Q 16 2Q 16 1Q 16 Numerator Common equity tier 1 capital (transition) $ 12.9 $ 13.0 $ 12.9 $ 12.8 $ 12.7 DTAs arising from NOL and tax credit carryforward
Slide 30: Notes on non-GAAP and other financial measures
Supplemental Notes on non-GAAP and other financial measures ($ millions) 1Q 17 4Q 16 1Q 16 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 $ 979 $ 16 $ 995 $ 976 $ 15 $ 991 $ 9