Ally Financial Inc. · NYSE:ALLY
Ally Financial — General Motors Acceptance — Investor Presentation (July 2005)
38 slides from Ally Financial's investor presentation, Jul 27, 2005
Slide 1: General Motors Acceptance Corp. State of the Business
General Motors Acceptance Corp. State of the Business July 27, 2005 Eric Feldstein - Chairman
Slide 2: GMAC Safe Harbor
GMAC Safe Harbor GMAC Safe Harbor
Slide 3: GMAC Highlights
GMAC Highlights 2005 Earnings GMAC net income through June closely tracking last year's record results Earnings for the first half of 2005 totaled $1,544 million RoE of 13.6% GMAC likely to exceed its 2005 target net income of $2.5 billion 2005 Liquidity Position At end of Q2, GMAC had global cash p
Slide 4: Recent / Pending Funding Developments
Recent / Pending Funding Developments (cont.) Executed 5-year auto whole loan agreement with BoA to sell full spectrum of active retail loans of up to $55 billion $5 billion whole loan sale before July month-end Up to $10 billion annually for the next 5 years Whole loan sale of $5 billion to BoA thi
Slide 5: Consolidated Earnings Trend
Consolidated Earnings Trend $ millions Non-Financing 16% 22% 24% 30% 26% 31% 34% 30% 34% 51% 49% % of Income Financing Mortgage / Insurance
Slide 6: GMAC Net Income - First Six Months
GMAC Net Income - First Six Months a $ Millions Financing Mortgage Insurance Total 2005 Memo: First Six Months O/(U) 2003 2005 2004 2004 June YTD 626 894 (268) 698 723 550 173 786 195 166 29 49 1,544 1,610 (66) 1,533
Slide 7: Insurance Operations
GMAC INSURANCE OPERATIONS
Slide 8: Insurance Net Income
Insurance Net Income $ millions
Slide 9: Insurance Premium / Revenue
Insurance Premium / Revenue Automotive Care Extended Service Contracts Maintenance Contracts GAP Insurance Commercial Automotive Dealer Inventory Property & Casualty Reinsurance Personal Vehicle Automobile Recreational Vehicle Motorcycle $ billions
Slide 10: Insurance Operating Trends
Insurance Operating Trends Increasing Premium / Revenue Favorable loss cost experience Steadily increasing underwriting profits Growing investment portfolio ($ billions) 12/02 12/03 12/04 6/05 Market Value of Investment Portfolio $5.1 $6.2 $7.3 $7.5 G G G G
Slide 11: Mortgage Operations
GMAC MORTGAGE OPERATIONS
Slide 12: Mortgage Group 2005 Outlook
Mortgage Group 2005 Outlook Residential Mortgage Industry Volume Lending Margins GMAC Mortgage Profitability
Slide 13: Mortgage Group 2005 Outlook
Mortgage Group 2005 Outlook Growth in Residential Market Share 9th consecutive year Higher Mortgage Servicing Income Profitable Expansion Overseas Substantial Increase in Commercial Mortgage Loan Production G G G G
Slide 14: Mortgage Net Income
Mortgage Net Income $ millions Memo: ($trillions) Industry Volume 2.0 2.6 3.8 2.8 ^ 2.6
Slide 15: ResCap
ResCap Successfully achieved investment grade ratings for ResCap Positioned to be "self-funding" over medium term Raised $4 billion in private placement of bonds at spreads well below those of GMAC Received aggregate commitments from its bank syndicate to provide credit lines of $3.5 billion Expect
Slide 16: ResCap Funding
ResCap Funding Equity Inter-Company Debt Repayment Banks Bond Investors Capital Market Transactions Debt ResCap will provide: Funding-cost efficiency Funding diversity Liquidity relief to GMAC
Slide 17: GMAC Commercial Mortgage
GMAC Commercial Mortgage GMAC nearing execution of definitive binding agreement to sell majority stake in GMAC Commercial Mortgage By introducing equity partners, Commercial Mortgage operations will have adequate capital to sustain profitable growth Terms of transaction will provide GMAC with: Multi
Slide 18: Financing Operations
GMAC FINANCING OPERATIONS
Slide 19: Financing Net Income
Financing Net Income $ millions
Slide 20: 2005 Financing Outlook
2005 Financing Outlook 2005 Outlook R Y Rising Market Interest Rates Widening GMAC Borrowing Spreads Balance Sheet Capacity Limitations Y G G G Asset Originations Credit Losses Gains on Off-Lease Vehicles
Slide 21: Strategic vs. Economic Considerations
Strategic vs. Economic Considerations Economic Considerations Reduce Capital Allocated to Relatively Low RoE Auto Finance Operations Strategic Considerations Support GM vehicle sales Increase Loan Originations Increase Serviced Assets Reduce Auto Finance Assets Free-up Capital Allocated to Financing
Slide 22: Transforming Auto Finance Business Model
Transforming Auto Finance Business Model Transition from "Storage Business" to "Moving Business" Historical Model: "Storage Business" Originate auto loans Store on GMAC balance sheet Earn net interest margin New Model: "Moving Business" Originate auto loans Sell auto loans to financial institutions
Slide 23: Originate/Sell Auto Finance Model
Originate/Sell Auto Finance Model GMAC "Front-End" Financial Institutions "Back-End" Unique Origination Platform Captive Financing for GM's Subvented Business Auto Loan Underwriting Expertise Loan Servicing Expertise Low Cost of Funds Balance Sheet Capacity
Slide 24: Strategic Financing Transaction with Bank of America
Strategic Financing Transaction with Bank of America GMAC has executed an agreement to sell up to $55 billion of automotive whole loans to BofA $5 billion whole loans to be sold by July month-end Up to $10 billion annually for the next 5 years GMAC's auto whole loan sales to BofA will include full s
Slide 25: Capital Allocation Strategy
Capital Allocation Strategy Free-up capital at Auto Financing Operations by transitioning to an "originate / sell" business model Redeploy capital to ResCap and Insurance Free-up capital from sale of majority equity stake in Commercial Mortgage Redeploy capital to ResCap and Insurance Remit majority
Slide 26: Funding & Liquidity
GMAC FUNDING & LIQUIDITY
Slide 27: GMAC Liquidity
GMAC Liquidity Global cash position at 6/30/05 of $22.2 billion* Substantial committed conduit capacity Substantial automotive whole loan purchase commitments extending through 2010 Favorable liquidity profile Maturities of interest-earning assets exceed maturities of interest- bearing liabilities f
Slide 28: New Funding Sources
New Funding Sources Cultivating many new funding channels Automotive Whole Loan Sales Agreements Bi-lateral flow agreements Syndicated multi-investor whole loan transactions Sale of subordinated tranches in the capital markets Non-traditional asset securitization Sub-prime auto assets Sale of sub-pr
Slide 29: 2005 U.S. Auto Funding Plan
2005 U.S. Auto Funding Plan * Includes pre-funding for 2005 ABCP Term ABS Bank Conduits 79% 54%
Slide 30: 2005 Funding Position
2005 Funding Position Upon $5 billion whole loan sale to BofA this week, GMAC will have essentially completed its U.S. term funding program for 2005 GMAC will seek to raise additional financing this year opportunistically Such borrowings will represent pre-funding of 2006 financing requirements
Slide 31: Structural Subordination Analysis
Structural Subordination Analysis GMAC's secured funding activity will increase through 2006 However, overall GMAC funding plan NOT expected to structurally subordinate unsecured debt holders Structural subordination occurs when high-quality assets are sold, leaving only lower quality assets on bala
Slide 32: Structural Subordination Analysis
Structural Subordination Analysis Current asset coverage ratio adequately protects unsecured debt holders Although unencumbered assets expected to decline, asset coverage ratio will remain stable-to-higher as unsecured debt levels decline even more rapidly $ Billions 2004 2005-2006 Unencumbered Asse
Slide 33: GM / GMAC Relationship
GMAC GM / GMAC Relationship
Slide 34: GM / GMAC Operating Agreement
GM / GMAC Operating Agreement Formal public operating agreement in place since 2001 All credit transactions are conducted and priced at prudent and commercially-reasonable standards and established on an arm's length basis GMAC's equity will be kept at commercially-reasonable levels to support its a
Slide 35: Strategic Challenges
Strategic Challenges GMAC facing challenging funding environment Access to unsecured debt market impaired Borrowing costs have increased sharply GMAC currently meeting all of its financing needs through wide variety of funding channels However, if access to unsecured borrowings remains impaired it w
Slide 36: Recent Public Announcements
Recent Public Announcements Rick Wagoner - GM Annual Meeting 6/7/05 GM exploring strategic alternatives with respect to GMAC in order to achieve 2 objectives: i. Higher ratings for GMAC ii. Continued GM/GMAC "hand-in-glove" operating relationship
Slide 37: Summary and Conclusion
Summary and Conclusion GMAC expects to exceed 2005 target net income of $2.5 billion Results for first half closely tracking 2004's record results Accomplished many key strategic initiatives ResCap successfully accessing cost-effective unsecured funding and providing liquidity relief to GMAC Five-ye
Slide 38: General Motors Acceptance Corporation
General Motors Acceptance Corporation
General Motors Acceptance — Investor Presentation (July 2005) on 6ix