Ally Financial Inc. · NYSE:ALLY
Ally Financial — Q1 2015 Earnings Presentation
27 slides from Ally Financial's earnings presentation, Apr 28, 2015
Slide 1: Ally Financial Inc. 1Q 2015 Earnings Review
Ally Financial Inc. 1Q 2015 Earnings Review April 28, 2015 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 The following should be read in conjunction with the financial statements, notes and other information contained in the Company’s Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K. This information is pr
Slide 3: Key Messages
Key Messages Diversifying our leading auto finance business Expanding franchise to drive long-term growth Improving shareholder returns Building a better financial services company 1Q 2015 Preliminary Results 3
Slide 4: First Quarter Highlights
First Quarter Highlights • Net income of $576 million and EPS of $1.06 – China gain of approximately $400 million partially offset by debt tender expense of $197 million • Core pre-tax income ex. repositioning items(1) of $490 million and Adjusted EPS(2) of $0.52 – Core ROTCE(3) of 9.1%, up from 6.5
Slide 5: Auto Franchise Diversification
Auto Franchise Diversification Diversified Originations Growth Channel Originations ($ billions) ($ billions) $9.7 $9.8 $2.7 $9.2 19% 12% 25% 5% $1.8 13% 59% 9% 35% $1.3 28% 31% 60% 20% 57% 26% 15% 37% 19% 28% 40% 35% 13% 1Q13 1Q14 1Q15 1Q13 1Q14 1Q15 Growth Chrysler GM Standard GM Subvented GM Leas
Slide 6: Growing Customer Base
Growing Customer Base Dealer Relationships Decisioned Applications (thousands) (millions) 16.2 17.1 15.8 6.7 2.5 6.8 6.7 2.1 9.0 9.5 10.4 1.9 1Q13 1Q14 1Q15 Growth Dealers GM / Chrysler 1Q13 1Q14 1Q15 Retail Auto Customers Retail Deposit Customers (millions) (thousands) 4.4 954 4.3 825 4.2 691 1Q13
Slide 7: Vision for Franchise Expansion
Vision for Franchise Expansion Leading Brand – “Best Online Bank”(1) P Scalable Nationwide Platform and Technology P Growing and Attractive Customer Base P Nimble and Flexible – No Branch Overhead P Culture of Innovation and Superior Customer Experience P Build on Strong Foundation Develop Smart Pro
Slide 8: First Quarter Financial Results
First Quarter Financial Results Increase/(Decrease) vs. ($ millions except per share data) 1Q 15 4Q 14 1Q 14 4Q 14 1Q 14 Net financing revenue (1) $ 860 $ 835 $ 865 $ 26 $ (4) (1)(2) Total other revenue 440 370 321 71 119 Provision for loan losses 116 155 137 (39) (21) (2) Controllable expenses 469
Slide 9: Results by Segment
Results by Segment • Auto Finance results driven by continued strong originations – Asset growth and lower cost of funds offset lower net lease revenue YoY – Lower provision expense driven by lower commercial loss expectations • Insurance results largely consistent both YoY and QoQ • Mortgage result
Slide 10: Net Interest Margin
Net Interest Margin • Net Interest Margin(1) up 12 bps QoQ driven by lower cost of funds and higher asset yields – Cost of funds(1) down 21 bps YoY and 5 bps QoQ driven by continued reduction of legacy high-cost debt and deposit growth – YoY NIM decline of 6 bps driven primarily by lower lease yield
Slide 11: Deposits
Deposits • Surpassed the $50 billion retail deposit milestone Stable, consistent growth of retail deposits • $2.7 billion of retail deposit growth QoQ, and $5.4 billion YoY Ally Bank Deposit Levels ($ billions) $60.5 – Deposits now represent 46% of Ally’s total funding $54.9 $55.6 $56.4 $57.8 $9.9 $
Slide 12: Capital
Capital • Tier 1 Common capital improved both YoY and QoQ, driven primarily by the closing of the China transaction, continued growth in net income available to common and Deferred Tax Asset (DTA) utilization – Preliminary fully phased-in Basel III Common Equity Tier 1 (CET1) ratio of 10.4% • Receiv
Slide 13: Capital Management
Capital Management • Ally’s 2015 capital plan resulted in a minimum stressed Tier 1 Common capital ratio of 7.1% in the Federal Reserve’s severely adverse scenario – Provides for reduction of $2.8 billion of high-cost capital securities Capital Redeployment Actions ($ b illions) Outstanding Approved
Slide 14: Tangible Book Value
Tangible Book Value • Analysts and investors have made various adjustments to Ally’s tangible book value • Tangible book value increased by $3 per share YoY Adjusted Tangible Book Value 1Q15 1Q14 $B Per Share $B Per Share GAAP Shareholder's Equity $ 15.9 $ 33.1 $ 14.5 $ 30.1 Preferred Equity and Goo
Slide 15: Asset Quality
Asset Quality Consolidated Net Charge-Offs U.S. Commercial Auto Net Charge-Offs 0.68% 0.60% 0.61% 0.53% 344% 0.53% 0.03% 234% 0.34% 224% 187% 0.01% 144% 155% 0.00% 0.00% 0.00% $2 -0.01% $1 $0 $0 ($0) ($1) 4Q 13 1Q 14 2Q 14 3Q 14 4Q 14 1Q 15 ALLL as % of Annualized NCOs Annualized NCO Rate 4Q 13 1Q 1
Slide 16: Auto Finance – Results
Auto Finance – Results • Auto Finance reported pre-tax income of $331 Increase/(Decrease) vs. million in 1Q, down $8 million YoY and up $21 Key Financials ($ millions) 1Q 15 4Q 14 1Q 14 million from the prior quarter Net financing revenue $ 809 $ 42 $ (11) Total other revenue 52 (17) (12) – Net fina
Slide 17: Auto Finance – Key Metrics
Auto Finance – Key Metrics Consumer Originations Origination Mix ($ billions; % of $ originations) (% of $ originations) $11.8 $10.9 20% $9.8 30% 30% $9.2 20% $9.0 36% $8.2 19% 16% 28% 17% 22% 18% 27% 15% 29% 17% 16% 18% 20% 8% 10% 7% 63% 63% 66% 66% 60% 24% 30% 31% 52% 9% 5% 5% 4Q 13 1Q 14 2Q 14 3Q
Slide 18: Insurance
Insurance • Pre-tax income of $78 million, up $4 million YoY and Increase/(Decrease) vs. down $8 million from the prior quarter Key Financials ($ millions) 1Q 15 4Q 14 1Q 14 Premiums, service revenue earned and other $ 237 $ (8) $ (7) – YoY increase driven primarily by lower vehicle Losses and loss
Slide 19: Mortgage and Corporate and Other
Mortgage and Corporate and Other Mortgage Results Corporate and Other Results Increase/(Decrease) vs. Increase/(Decrease) vs. Key Financials ($ millions) 1Q 15 4Q 14 1Q 14 Key Financials ($ millions) 1Q 15 4Q 14 1Q 14 Net financing revenue (ex. OID) $ 24 $ (26) $ 9 Net financing revenue $ 15 $ 7 $ 1
Slide 20: Conclusion
Conclusion • Demonstrating strength of auto franchise and dealer relationships – Diversified origination mix offsetting GM lease decline • Continued strong deposit customer growth • Strong financial results in 1Q and driving towards year-end financial targets • Building a better financial services c
Slide 21: Supplemental Charts
Supplemental Charts
Slide 22: First Quarter Financial Results
Supplemental First Quarter Financial Results Increase/(Decrease) vs. ($ millions) 1Q 15 4Q 14 1Q 14 4Q 14 1Q 14 Net financing revenue (1) $ 860 $ 835 $ 865 $ 26 $ (4) (1)(2) Total other revenue 440 370 321 71 119 Provision for loan losses 116 155 137 (39) (21) Controllable expenses (2) 469 478 487 (
Slide 23: Funding
Supplemental Funding • Diversified funding strategy with opportunities to lower cost of funds Total Asset Breakdown – 68% of total assets reside at Ally Bank ($ billions) – Deposits now represent 46% of Ally’s funding $148.5 $149.9 $149.2 $151.8 $153.5 • Efficient capital markets funding in 1Q – $2.
Slide 24: Discontinued Operations
Supplemental Discontinued Operations • Closed China joint-venture sale in January 2015, generating a gain of approximately $400 million Impact of Discontinued Operations Increase/(Decrease) vs. ($ millions) 1Q 15 4Q 14 1Q 14 Auto Finance $ 454 $ 431 $ 425 Insurance - (0) 0 Corporate and Other 6 0 7
Slide 25: Deferred Tax Asset
Supplemental Deferred Tax Asset Deferred Tax Asset 1Q 15 (1) 4Q 14 ($ millions) Gross DTA/(DTL) Valuation Net DTA/(DTL) Net DTA/(DTL) Balance Allowance Balance Balance Net Operating Loss (Federal) $ 913 $ - $ 913 $ 1,001 Capital Loss (Federal) 6 - 6 22 Tax Credit Carryforwards 1,920 (478) 1,442 1,43
Slide 26: Notes on non-GAAP and other financial measures
Supplemental Notes on non-GAAP and other financial measures $ millions 1Q 15 4Q 14 1Q 14 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 $ 850 $ 10 $ 860 $ 799 $ 36 $ 835 $ 821
Slide 27: Notes on non-GAAP and other financial measures
Supplemental Notes on non-GAAP and other financial measures 1) Core pre-tax income (loss) is a non-GAAP financial measure. It is defined as income (loss) from continuing operations before income tax expense and primarily bond exchange original issue discount ("OID") amortization expense. 2) Repositi