Slide 1: Ally Financial Inc. 2Q 2017 Earnings Review
Ally Financial Inc. 2Q 2017 Earnings Review July 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 2Q 17 1Q 17 4Q 16 3Q 16 2Q 16 GAAP net income available to common ("NIAC") $ 252 $ 214 $ 248 $ 209 $ 345 (1)(2) Core net income available to common $ 265 $ 224 $ 256 $ 271 $ 263 GAAP earnings per common share ("EPS")(diluted, NIAC) $ 0.55 $ 0.46 $ 0.52 $ 0.43 $
Slide 4: Second Quarter Highlights
Second Quarter Highlights Adjusted EPS(1) of 58 cents – up 7% YoY Adjusted total net revenue(1) of $1.47 billion – up $100 million YoY Retail auto net charge-off rate of 1.20% – tracking to 1.4 - 1.6% guidance for full year Auto lease yield of 6.6% up from 5.7% in 1Q 2Q total deposit growt
Slide 5: Core Metric Trend
Core Metric Trend Adjusted Earnings per Share(1) Adjusted Total Net Revenue(2) ($ millio ns) $1,472 $0.58 $0.56 $1,399 $0.53 $0.54 $0.54 $1,383 $1,391 $388 $0.52 $0.51 $0.52 $0.52 $1,372 $1,353 $1,344 $0.46 $0.48 $1,311 $1,313 $388 $1,301 $1,295 $392 $396 $0.42 $1,284 $358 $374 $0.40 $380 $332 $375
Slide 6: Second Quarter Financial Results
Second Quarter Financial Results Increase / (Decrease) vs. ($ millions except per share data) 2Q 17 1Q 17 2Q 16 1Q 17 2Q 16 (1) Net financing revenue (excld OID) $ 1,084 $ 995 $ 998 $ 89 $ 87 OID expense (17) (16) (14) (1) (4) Net financing revenue (as reported) 1,067 979 984 88 83 Total other reven
Slide 7: Net Financing Revenue
Net Financing Revenue • Net financing revenue (excluding OID)(1) of $1,084 million up $89 million QoQ − Combination of balance sheet growth and increasing asset yields • Net Interest Margin (“NIM”) of 2.76% • NIM (excluding OID)(1) of 2.80% up 8 bps YoY and 16 bps QoQ Net Interest Margin ($ millions
Slide 8: Deposits
Deposits • Total deposits growth of $1.7 billion in 2Q 17 Stable, consistent growth of retail deposits – Retail deposits up $1.1 billion QoQ and $9.9 billion Deposit Levels (EOP) YoY ($ billions) $84.5 $86.2 $79.0 • Total deposits at $86.2 billion up 18% YoY $72.8 $75.7 $14.5 $15.1 $11.9 $12.4 $11.6
Slide 9: Capital
Capital • Received non-objection to 2017 CCAR capital plan Capital Ratios(1) and Risk-Weighted Assets – 9% increase in share repurchases up to $760 million 12.8% 12.7% 12.7% 12.8% 12.5% – Increase in quarterly cash dividend on common 11.1% 11.1% 11.0% 11.1% 10.9% stock from $0.08 per share to $0.12
Slide 10: Asset Quality
Asset Quality Consolidated Net Charge-Offs Provision Expense ($ millions) 0.88% 0.86% 0.75% Provision Expense 1Q 16 2Q 16 3Q 16 4Q 16 1Q 17 2Q 17 0.72% 0.64% 0.66% 0.61% Retail Auto $ 207 $ 168 $ 269 $ 275 $ 267 $ 260 0.54% Commercial Auto 2 2 1 - 1 6 Mortgage Finance 3 - 1 (8) 1 1 Corporate Finance
Slide 11: Auto Finance – Results
Auto Finance – Results • Auto Finance reported pre-tax income of $347 million in Increase/(Decrease) vs. 2Q, down $79 million YoY and up $59 million QoQ Key Financials ($ millions) 2Q 17 1Q 17 2Q 16 Net financing revenue $ 932 $ 40 $ 3 Total other revenue 107 6 30 – Net financing revenue up QoQ due
Slide 12: Auto Finance – Key Metrics
Auto Finance – Key Metrics Consumer Originations Origination Mix ($ billions; % of $ originations) (% of $ originations) $9.4 $9.3 $9.0 $8.9 $8.6 45% 43% 40% 41% 47% $8.2 48% 37% 37% 36% 36% 40% 41% 9% 11% 8% 9% 10% 13% 26% 28% 29% 27% 28% 30% 46% 48% 49% 50% 42% 40% 37% 35% 35% 37% 32% 30% 1Q 16 2Q
Slide 13: Insurance
Insurance • Pre-tax loss of $21 million versus a pre-tax loss of $18 Increase/(Decrease) vs. in the prior year quarter and down $61 million QoQ Key Financials ($ millions) 2Q 17 1Q 17 2Q 16 Premiums, service revenue earned and other $ 232 $ (12) $ (9) – Seasonally higher weather losses QoQ partially
Slide 14: Corporate Finance
Corporate Finance • Pre-tax income of $35 million, up $21 million YoY and up $10 million QoQ Increase/(Decrease) vs. Key Financials ($ millions) 2Q 17 1Q 17 2Q 16 – Net financing revenue up YoY and QoQ driven by Net financing revenue $ 48 $ 14 $ 19 strong loan growth and interest income recovery in
Slide 15: Mortgage Finance
Mortgage Finance • Pre-tax income of $7 million, down $2 million YoY and Increase/(Decrease) vs. QoQ Key Financials ($ millions) 2Q 17 1Q 17 2Q 16 Net financing revenue $ 32 $ (2) $ 6 – Higher net financing revenue YoY driven by asset Total other revenue 1 1 1 balance growth from bulk purchase activ
Slide 16: Plan for Driving Strong Shareholder Returns – On Track
Plan for Driving Strong Shareholder Returns – On Track 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-term
Slide 17: Supplemental Charts
Supplemental Charts
Slide 18: Results by Segment
Supplemental Results by Segment Pre-Tax Income Increase/(Decrease) vs. ($ millions) 2Q 17 1Q 17 2Q 16 Automotive Finance $ 347 $ 59 $ (79) Insurance (21) (61) (3) Dealer Financial Services $ 326 $ (2) $ (82) Mortgage Finance 7 (2) (2) Corporate Finance 35 10 21 Corporate and Other 8 44 26 Pre-tax in
Slide 19: Funding and Liquidity
Supplemental Funding and Liquidity • Ally Bank funded assets at 77% up 4 pts YoY Growth in Bank Funded Assets • Deposits at 59% of total funding (ex OID) up 7 pts YoY ($ billions) • New secured funding in 2Q 17 $157.9 $157.4 $163.7 $162.1 $164.3 – $1.0 billion retail auto securitization – $0.8 billi
Slide 20: Corporate and Other
Supplemental Corporate and Other • Corporate and Other includes the impact of centralized Increase/(Decrease) vs. asset and liability management, corporate overhead Key Financials ($ millions) 2Q 17 1Q 17 2Q 16 allocation activities, the legacy mortgage portfolio and Net financing revenue (loss) $ 4
Slide 21: Interest Rate Sensitivity
Supplemental Interest Rate Sensitivity Net Financing Revenue Impact(1) vs. Forward Curve 2Q 17 1Q 17 Ally Modeled 50% Deposit Ally Modeled 50% Deposit $ million Scenario(2) Pass-Through Scenario(2) Pass-Through +100 bp Instantaneous $ (69) $ 21 $ (52) $ 45 +100 bp Gradual (over 12 months) $ (12) $ 2
Slide 22: Deferred Tax Asset
Supplemental Deferred Tax Asset Deferred Tax Asset 2Q 17 (1) 1Q 17 (1) ($ millions) Gross DTA/(DTL) Valuation Net DTA/(DTL) Net DTA/(DTL) Balance Allowance Balance Balance Net Operating Loss (Federal) $ 576 $ - $ 576 $ 848 Capital Loss (Federal) 22 (22) - - Tax Credit Carryforwards 2,006 (483) 1,523
Slide 23: 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 24: GAAP to Core Results - Quarterly
Supplemental GAAP to Core Results - Quarterly Adjusted Earnings per Share ("Adjusted EPS") QUARTERLY TREND 2Q 17 1Q 17 4Q 16 3Q 16 2Q 16 1Q 16 4Q 15 3Q 15 2Q 15 1Q 15 4Q 14 3Q 14 2Q 14 Numerator ($ millions) GAAP net income available to common shareholders $ 252 $ 214 $ 248 $ 209 $ 345 $ 235 $ (953)
Slide 25: GAAP to Core Results - Quarterly
Supplemental GAAP to Core Results - Quarterly Adjusted Tangible Book Value per Share ("Adjusted TBVPS") QUARTERLY TREND 2Q 17 1Q 17 4Q 16 3Q 16 2Q 16 1Q 16 4Q 15 3Q 15 2Q 15 1Q 15 4Q 14 3Q 14 2Q 14 Numerator ($ billions) GAAP shareholder's equity $ 13.5 $ 13.4 $ 13.3 $ 13.6 $ 13.6 $ 13.8 $ 13.4 $ 14
Slide 26: GAAP to Core Results - Quarterly
Supplemental GAAP to Core Results - Quarterly Core Return on Tangible Common Equity ("Core ROTCE") QUARTERLY TREND 2Q 17 1Q 17 4Q 16 3Q 16 2Q 16 Numerator ($ millions) GAAP net income available to common shareholders $ 252 $ 214 $ 248 $ 209 $ 345 Disc Ops, net of tax 2 (1) (2) 52 (3) Original issue
Slide 27: GAAP to Core Results - Quarterly
Supplemental GAAP to Core Results - Quarterly Adjusted Efficiency Ratio QUARTERLY TREND 2Q 17 1Q 17 4Q 16 3Q 16 2Q 16 Numerator ($ millions) Total noninterest expense $ 810 $ 778 $ 721 $ 735 $ 773 Rep and warrant expense (0) (0) (0) (2) (3) Insurance expense 280 239 207 222 293 Repositioning items -
Slide 28: 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) 2Q 17 1Q 17 4Q 16 3Q 16 2Q 16 Numerator Common equity tier 1 capital (transition) $ 13.1 $ 12.9 $ 13.0 $ 12.9 $ 12.8 DTAs arising from NOL and tax credit carryforward
Slide 29: Notes on non-GAAP and other financial measures
Supplemental Notes on non-GAAP and other financial measures $ in millions 2Q 17 1Q 17 2Q 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 $ 1,067 $ 17 $ 1,084 $ 979 $ 16 $ 99