Ally Financial Inc. · NYSE:ALLY
Ally Financial — Q3 2013 Earnings Presentation
27 slides from Ally Financial's earnings presentation, Nov 5, 2013
Slide 1: Ally Financial Inc. 3Q Earnings Review
Ally Financial Inc. 3Q Earnings Review Contact Ally Investor Relations at (866) 710 - 4623 or investor.relations@ally.com November 5, 2013
Slide 2: Forward-Looking Statements and Additional Information
2 3Q 2013 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: Third Quarter Highlights
3 3Q 2013 Preliminary Results Strong Core Business Trends x Private Placement of $1 billion of common equity, subject to certain closing conditions x Cost of funds (2) declined 57 bps YoY due to liability management actions x Net financing revenue (2) up 46% YoY x Net interest margin (2) up 74 bps Y
Slide 4: Common Equity Raise Recap
4 3Q 2013 Preliminary Results Common Equity Raise Recap • Private Placement of $1.0 billion of Ally common equity – Signed definitive agreements on August 19 – 12 institutional investors participated • Transaction to be completed in conjunction with : – Non - objection of CCAR Plan – Repurchase of S
Slide 5: Strategic Transformation
5 3Q 2013 Preliminary Results Strategic Transformation • Successful operational transformation to an independent, market driven auto finance competitor – $158 billion of consumer originations since 2009 • Built a leading direct bank brand – $25 billion of retail deposit growth since 2009 • Resolved
Slide 6: Visible Path to Improved Profitability
6 3Q 2013 Preliminary Results Visible Path to Improved Profitability • Volatility associated with the mortgage business has been substantially removed • Earnings are expected to be more stable and steadily improve over time – Meaningful core income growth • Improvement will be primarily driven by: A
Slide 7: Third Quarter Financial Results
7 3Q 2013 Preliminary Results ($ millions) 3Q 13 2Q 13 3Q 12 2Q 13 3Q 12 Net financing revenue (ex. OID) 801$ 689$ 548$ 112$ 253$ Total other revenue 367 411 774 (44) (408) Provision for loan losses 141 89 105 52 36 Controllable expenses (1) 488 498 545 (10) (57) Other noninterest expenses 268 300 2
Slide 8: Results by Segment
8 3Q 2013 Preliminary Results Results by Segment (1) Mortgage and Corporate and Other results exclude the impact of repositioning items. Corporate and Other excludes OID amortization expense. See slide 26 for details (2) Core pre - tax income as presented excludes the impact of repositioning items,
Slide 9: Net Interest Margin
9 3Q 2013 Preliminary Results Net Interest Margin • Net Interest Margin (“NIM”) improved 30 bps QoQ and 74 bps YoY • Cost of funds declined 34 bps QoQ and 57 bps YoY driven primarily by the redemption of high - cost legacy callable debt – Expect additional improvement as debt calls continue Note: Co
Slide 10: Cost of Funds
10 3Q 2013 Preliminary Results Average Outstanding Balance ($M) Quarterly Interest Expense ($M) (1) Annualized Cost of Funds Average Outstanding Balance ($M) (2) Quarterly Interest Expense ($M) (1) Annualized Cost of Funds Callable at Par 9,995$ 183$ 7.34% 7,155$ 131$ 7.26% Non-Callable/Other 24,844
Slide 11: Ally Financial Liquidity Position
11 3Q 2013 Preliminary Results Ally Financial Liquidity Position ($ billions) $24.0 $22.0 $11.5 $11.5 2Q 13 3Q 13 Parent Co. Liquidity Unsecured Bond Maturities (next 24 months) Ally Financial Consolidated Unsecured Long-Term Debt Maturity Profile ($ billions) $0.9 $5.5 $5.1 $2.3 $2.6 4Q 13 2014 201
Slide 12: Ally Financial Capital
12 3Q 2013 Preliminary Results Ally Financial Capital $150 $154 $142 $127 $127 14.6% 14.1% 15.6% 16.5% 16.4% 13.6% 13.1% 14.6% 15.4% 15.4% 7.3% 7.0% 7.9% 8.0% 7.9% 9.3% 3Q 12 4Q 12 1Q 13 2Q 13 3Q 13 Risk-Weighted Assets Total Capital Ratio Tier 1 Ratio Tier 1 Common Ratio Pro Forma Tier 1 Common Rat
Slide 13: Asset Quality
13 3Q 2013 Preliminary Results $120 $121 $99 $99 $97 $95 0.29% 0.42% 0.53% 0.46% 0.42% 0.53% 2Q 12 3Q 12 4Q 12 1Q 13 2Q 13 3Q 13 Ending Loan Balance ($B) Net Charge-Off Rate Consolidated Annualized Net Charge - Offs Reserve C overage of Net Charge - Offs Asset Quality U.S. Retail Auto Annualized Net
Slide 14: Auto Finance Key Financials
14 3Q 2013 Preliminary Results Key Financials ($ millions) 3Q 13 2Q 13 3Q 12 Net financing revenue 800$ 23$ 72$ Total other revenue 65 5 (10) Total net revenue 865 28 62 Provision for loan losses 150 62 49 Noninterest expense 376 9 11 Pre-tax income from continuing ops 339$ (43)$ 2$ U.S. auto earnin
Slide 15: Auto Finance – Key Metrics
15 3Q 2013 Preliminary Results ($ billions) $31.8 $30.6 $32.5 $32.0 $30.3 $28.1 2Q 12 3Q 12 4Q 12 1Q 13 2Q 13 3Q 13 ($ billions) $10.5 $9.6 $8.9 $9.7 $9.8 $9.6 2Q 12 3Q 12 4Q 12 1Q 13 2Q 13 3Q 13 Retail - New Retail - Used Lease ($ billions) $73.0 $74.5 $75.3 $76.5 $77.6 $78.2 2Q 12 3Q 12 4Q 12 1Q 1
Slide 16: Insurance Key Financials
16 3Q 2013 Preliminary Results Key Financials ($ millions) 3Q 13 2Q 13 3Q 12 Insurance premiums, service revenue earned and other 254$ (9)$ (14)$ Insurance losses and loss adjustment expenses 85 (61) (5) Acquisition and underwriting expenses 141 (8) (3) Total underwriting income 28 60 (6) Investment
Slide 17: Mortgage Key Financials
17 3Q 2013 Preliminary Results Key Financials ($ millions) 3Q 13 2Q 13 3Q 12 Net financing revenue 13$ (2)$ (32)$ Gain on sale of mortgage loans, net 15 16 (125) Other revenue (excluding gain on sale) 3 (1) (303) Total net revenue 31 13 (460) Provision for loan losses (12) (18) (17) Noninterest expe
Slide 18: Corporate and Other Key Financials
18 3Q 2013 Preliminary Results Key Financials ($ millions) 3Q 13 2Q 13 3Q 12 Net financing (loss) revenue (ex. OID) (28)$ 90$ 211$ Total other revenue (9) (32) (30) Provision for loan losses 3 8 4 Noninterest expense 105 7 22 Core pre-tax loss (1) (146)$ 43$ 155$ OID amortization expense (2) 64 3 (1
Slide 19: Ally Bank Deposit Franchise
19 3Q 2013 Preliminary Results Ally Bank Deposit Levels and Retail Portfolio Interest Expense ($ billions) $32.1 $35.0 $38.8 $39.9 $41.7 $42.0 $45.0 $48.6 $49.4 $51.4 1.36% 1.34% 1.29% 1.24% 1.22% 3Q 12 4Q 12 1Q 13 2Q 13 3Q 13 Ally Bank Retail Ally Bank Brokered Average Retail Portfolio Interest Exp
Slide 20: Direct Banking Market
20 3Q 2013 Preliminary Results Direct Banking Market • T he direct banking market has experienced significant growth over the last 10 years – The direct banking market grew to 10% of the total retail deposit market in 2012 vs. 3% in 2002 – Represents a 22% CAGR for direct banks vs. 6% CAGR for tradi
Slide 21: Conclusion
21 3Q 2013 Preliminary Results Conclusion • Positive core business trends continue – Solid auto finance performance and steady deposit growth • Strategic transformation nearly complete – Streamlined company with significantly improved credit profile – Addressed legacy mortgage issues • Normalizing c
Slide 22: Supplemental Charts
Supplemental Charts
Slide 23: International Entities Summary
23 3Q 2013 Preliminary Results International Entities Summary (1) ($ billions) Business Closing Date Assets Tangible Book Value (2) Proceeds (3) Premium to TBV Canada (4) 1Q 2013 12.0$ 3.1$ 4.1$ 0.6$ Europe, Mexico, Colombia and Chile 2Q 2013 12.2 2.5 2.8 0.1 ABA Seguros 2Q 2013 1.0 0.3 0.9 0.4 Braz
Slide 24: Impact of Discontinued Operations
24 3Q 2013 Preliminary Results Impact of Discontinued Operations ($ millions) 3Q 13 2Q 13 3Q 12 Auto Finance (1) 60$ 305$ (65)$ Insurance 5 (289) (8) Mortgage - - 0 Corporate and Other (2) (161) 1,532 (193) Consolidated pre-tax income (96)$ 1,548$ (266)$ Tax expense (10) 606 (48) Consolidated net in
Slide 25: Liquidity Supplemental
25 3Q 2013 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) Includes UST, Agency debt and Agency MBS (3) Includes equal allocation of shared unused
Slide 26: Notes on non-GAAP and other financial measures
26 3Q 2013 Preliminary Results Notes on non - GAAP and other financial measures Supplemental Core pre - tax income (loss) and controllable expenses are non GAAP financial measures. See slide 27 for definitions $ in millions GAAP OID & Repositioning Items Proforma GAAP OID & Repositioning Items Profo
Slide 27: Notes on non-GAAP and other financial measures
27 3Q 2013 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