Slide 1: Ally Financial Inc. 3Q Earnings Review
Ally Financial Inc. 3 Q Earnings Review Contact Ally Investor Relations at (866) 710 - 4623 or investor.relations@ally.com October 29, 2014
Slide 2: Forward-Looking Statements and Additional Information
2 3Q 2014 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 2014 Preliminary Results Third Quarter Highlights • Net income of $423 million and EPS of $0.74 – Core pretax income (1) of $467 million, and Adjusted EPS (2) of $0.53 – Core ROTCE (3 ) of 9.1%, up from 5.4% in 3Q13 • Auto originations of $11.8 billion, up from $9.6 billion in 3Q13 – Strong per
Slide 4: Third Quarter Financial Results
4 3Q 2014 Preliminary Results ($ millions except per share data) 3Q 14 2Q 14 3Q 13 2Q 14 3Q 13 Net financing revenue (1) 936$ 912$ 801$ 24$ 135$ Total other revenue (1) 375 372 367 3 8 Provision for loan losses 102 63 141 39 (39) Total noninterest expense 742 805 756 (63) (14) Core pre-tax income, e
Slide 5: Pre-Tax Income: Results by Segment
5 3Q 2014 Preliminary Results Pre-Tax Income ($ millions) 3Q 14 2Q 14 3Q 13 Automotive Finance 415$ (46)$ 76$ Insurance 60 83 (23) Dealer Financial Services 475$ 37$ 53$ Mortgage (3) (30) 2 Corporate and Other (1) (5) 43 140 Core pre-tax income, ex. repositioning (2) 467$ 50$ 196$ Increase/(Decrease
Slide 6: Net Interest Margin
6 3Q 2014 Preliminary Results Net Interest Margin • Net Interest Margin (1) improved 31 bps YoY and 2 bps QoQ – Cost of funds (1) declined 50 bps YoY driven primarily by the redemption of legacy high - cost callable debt and continued growth in deposits ▪ $30 million of accelerated interest expense
Slide 7: LT Unsecured Debt and Liability Management
7 3Q 2014 Preliminary Results LT Unsecured Debt $ millions 12/31/12 Outstanding Matured Called Issued FX 9/30/14 Outstanding Legacy High-Cost (1) 28,055$ (1,267)$ (9,840)$ -$ (57)$ 16,891$ Other Unsecured Debt 6,341 (3,789) - 5,649 - 8,201 OID (1,840) - - - - (1,455) FMV 1,094 - - - - 414 Book Value
Slide 8: Ally Bank Deposit Franchise
8 3Q 2014 Preliminary Results Ally Bank Deposit Levels ($ billions) $41.7 $43.2 $45.2 $45.9 $46.7 $51.4 $52.8 $54.9 $55.6 $56.4 3Q 13 4Q 13 1Q 14 2Q 14 3Q 14 Ally Bank Retail Ally Bank Brokered Ally Bank Deposit Franchise • Continued franchise momentum with nearly $47 billion of retail deposits • $0
Slide 9: Expenses
9 3Q 2014 Preliminary Results Expenses • Controllable expenses down $19 million YoY and $128 million YTD – QoQ increase driven by higher compensation and benefit expense as a result of the equity compensation revaluation in 2Q • Other noninterest expense down QoQ driven by seasonally lower weather -
Slide 10: Capital
10 3Q 2014 Preliminary Results Capital • Tier 1 Common capital increased in the quarter driven primarily by $356 million of net income available to common • Tier 1 Common ratio of 9.7%, up 177 bps YoY and 30 bps QoQ – Estimated fully phased - in Basel III Common Equity Tier 1 ratio of 9.8% Tier 1 Co
Slide 11: Asset Quality
11 3Q 2014 Preliminary Results 287% 238% 234% 224% 344% 187% 0.42% 0.53% 0.53% 0.53% 0.34% 0.60% 2Q 13 3Q 13 4Q 13 1Q 14 2Q 14 3Q 14 ALLL as % of Annualized NCOs Annualized NCO Rate $1,171 $1,192 $1,208 $1,198 $1,183 $1,113 ALLL Balance ($M) (30+ DPD) $999 $1,188 $1,325 $904 $1,174 $1,338 1.78% 2.10
Slide 12: Auto Finance Key Financials
12 3Q 2014 Preliminary Results Key Financials ($ millions) 3Q 14 2Q 14 3Q 13 Net financing revenue 850$ (34)$ 50$ Total other revenue 69 7 4 Total net revenue 919 (27) 54 Provision for loan losses 109 10 (41) Noninterest expense 395 9 19 Pre-tax income from continuing ops 415$ (46)$ 76$ U.S. auto ea
Slide 13: Auto Finance – Key Metrics
13 3Q 2014 Preliminary Results ($ billions; % of $ originations) 64% 69% 66% 66% 63% 63% 21% 15% 16% 15% 17% 16% 15% 16% 18% 19% 20% 20% $9.8 $9.6 $8.2 $9.2 $10.9 $11.8 2Q 13 3Q 13 4Q 13 1Q 14 2Q 14 3Q 14 GM Chrysler Growth (EOP $ billions) $72.1 $73.7 $74.1 $74.9 $76.9 $78.0 2Q 13 3Q 13 4Q 13 1Q 14
Slide 14: Insurance Key Financials
14 3Q 2014 Preliminary Results Key Financials ($ millions) 3Q 14 2Q 14 3Q 13 Insurance premiums, service revenue earned and other 250$ (2)$ (4)$ Insurance losses and loss adjustment expenses 97 (91) 12 Acquisition and underwriting expenses 146 5 5 Total underwriting income 7 84 (21) Investment incom
Slide 15: Mortgage and Corporate and Other Key Financials
15 3Q 2014 Preliminary Results Key Financials ($ millions) 3Q14 2Q14 3Q13 Net financing revenue (ex. OID) 61$ 61$ 89$ Total other revenue (ex. OID) 19 8 28 Provision for loan losses - 11 (3) Noninterest expense 85 14 (20) Core pre-tax loss (1) (5)$ 43$ 140$ OID amortization expense (2) 47 (7) (17) P
Slide 16: Summary and Outlook
16 3Q 2014 Preliminary Results Summary and Outlook • Strong operating performance in the core businesses – $ 11.8 billion of auto originations – Growth channel originations up 54% YoY – Retail deposits up 12% YoY • Financial performance ahead of expectations with further long - term improvement targ
Slide 17: Supplemental Charts
Supplemental Charts
Slide 18: Third Quarter Financial Results
18 3Q 2014 Preliminary Results ($ millions) 3Q 14 2Q 14 3Q 13 2Q 14 3Q 13 Net financing revenue (1) 936$ 912$ 801$ 24$ 135$ Total other revenue (1) 375 372 367 3 8 Provision for loan losses 102 63 141 39 (39) Controllable expenses (2) 469 458 488 11 (19) Other noninterest expenses 273 347 268 (74) 5
Slide 19: Funding
19 3Q 2014 Preliminary Results ($ in millions) Average Outstanding Balance (1) Quarterly Interest Expense Annualized Cost of Funds LT Unsecured Debt 24,586$ 319$ 5.15% Secured Debt 41,528 123 1.18% Other Borrowings (2) 9,171 16 0.69% Deposits 56,376 166 1.17% Total / Weighted Average 131,661$ 624$ 1
Slide 20: Liquidity Supplemental
20 3Q 2014 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) To optimize the use of cash, Ally Financia
Slide 21: Impact of Discontinued Operations
21 3Q 2014 Preliminary Results Impact of Discontinued Operations ($ millions) 3Q 14 2Q 14 3Q 13 Auto Finance 29$ 7$ (31)$ Insurance 6 5 1 Corporate and Other (1) 16 (9) 177 Consolidated pre-tax income 51$ 3$ 147$ Tax (benefit) expense (2) (78) (86) (68) Consolidated net income 130$ 90$ 216$ Increase
Slide 22: Deferred Tax Asset
22 3Q 2014 Preliminary Results Deferred Tax Asset (1) 2Q14 ($ millions) Gross DTA/(DTL) Balance Valuation Allowance Net DTA/(DTL) Balance Net DTA/(DTL) Balance Net Operating Loss (Federal) 798$ -$ 798$ 885$ Capital Loss (Federal) 354 354 - - Tax Credit Carryforwards 1,915 496 1,419 1,346 State/Local
Slide 23: Notes on non-GAAP and other financial measures
23 3Q 2014 Preliminary Results Notes on non - GAAP and other financial measures Supplemental (1) Represents core pre - tax income excluding repositioning items. See slide 24 for definitions $ in millions GAAP OID & Repositioning Items Non-GAAP (1) GAAP OID & Repositioning Items Non-GAAP (1) GAAP OID
Slide 24: Notes on non-GAAP and other financial measures
24 3Q 2014 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 income tax expense and primarily bond exchange original issue discount ("OI