Ally Financial Inc. · NYSE:ALLY
Ally Financial — Q4 2021 Earnings Presentation
52 slides from Ally Financial's earnings presentation, Jan 21, 2022
Slide 1: Ally Financial Inc. 4Q 2021 Earnings Review
4Q 2021 Preliminary Results Ally Financial Inc. 4Q 2021 Earnings Review January 21, 2022 Contact Ally Investor Relations at (866) 710-4623 or investor.relations@ally.com 1
Slide 2: Forward-Looking Statements and Additional Information
4Q 2021 Preliminary Results 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 C
Slide 3: GAAP & Core Results: Annual
4Q 2021 Preliminary Results GAAP & Core Results: Annual $ millions except per share data 2021 2020 2019 2018 2017 2016 2015 GAAP net income (loss) attributable to common shareholders ("NIAC") $ 3,003 $ 1,085 $ 1,715 $ 1,263 $ 929 $ 1,037 $ (1,282) (1)(2) Core net income attributable to common shareh
Slide 4: GAAP & Core Results: Quarterly
4Q 2021 Preliminary Results GAAP & Core Results: Quarterly $ millions except per share data 4Q 21 3Q 21 2Q 21 1Q 21 4Q 20 GAAP net income attributable to common shareholders (NIAC) $ 624 $ 683 $ 900 $ 796 $ 687 Core net income attributable to common shareholders (1)(2) $ 705 $ 782 $ 868 $ 790 $ 606
Slide 5: 2021 Full-Year Highlights
4Q 2021 Preliminary Results 2021 Full-Year Highlights Focused Execution Leading, Growing Businesses $8.61 24.3% $8.4B 10.3% Adjusted Core Adjusted Total CET1 EPS(1) ROTCE(1) Net Revenue(1) Capital Ratio • Record-setting results demonstrate growth and momentum across Ally’s leading Auto, Insurance, a
Slide 6: Ally's Culture & Priorities
4Q 2021 Preliminary Results Ally’s Culture & Priorities do it right culture & values customers Relentless focus on our dealers, consumers & commercial clients employees Ongoing prioritization of our teammates and their well-being Driving long-term, enhanced value for communities ALL stakeholders Dri
Slide 7: Ally's Proven Ability to Deliver
4Q 2021 Preliminary Results Ally’s Proven Ability to Deliver Auto & Insurance: Agile, Diversified Market Leader P #1 Prime Auto Lender | Comprehensive product suite | Skilled, experienced teams | Differentiating via data, tech & digital Ally Bank: Leading, Growing, All-Digital Disruptor P #1 Direct,
Slide 8: Ally's Comprehensive Product Suite
4Q 2021 Preliminary Results Ally’s Comprehensive Product Suite Customer-Centric Expanded & Sophisticated P Launched / Enhanced Since 2014 Consumer Checking, Consumer Commercial Auto Loans Savings & Borrow Borrow & Leases CD’s Retail Auto Floorplan Inventory Consumer Lease Commercial Dealer: Real Est
Slide 9: Ally's Differentiated Offerings
4Q 2021 Preliminary Results Ally’s Differentiated Offerings Innovative & Tech-forward Award-winning Auto & Insurance #1 Automation: 70% of approved apps auto-decisioned in 2021 Dealer Satisfaction (2) (1) Best Online Bank J.D. Power Award Servicing: >75% of inbound + >40% of outbound interactions ar
Slide 10: Leading Businesses: Growing & Deepening Relationships
4Q 2021 Preliminary Results Leading Businesses: Growing & Deepening Relationships Ally Customer Growth Trends Unique, active customers per product line (1) 52% increase in Ally’s customer base 2014 → 2021 10.5M 9.4M 8.5M Ally Bank 7.4M Customers 3.8M 6.9M 0.9M Auto & Insurance 6.7M 6.0M Customers 20
Slide 11: Balance Sheet: Optimized, Diversified & Growing
4Q 2021 Preliminary Results Balance Sheet: Optimized, Diversified & Growing Balance Sheet Expansion End of Period Assets ($ billions) Asset growth of $31B or 20% 2014 → 2021 $179B $182B Ally Home / Mort. $182B $164B Ally Lending $28B $152B Fair Square (Card) Corp Finance $5B Outlook: Auto Steady, $1
Slide 12: Earnings: Enhanced, Diversified & Expanded
4Q 2021 Preliminary Results Earnings: Enhanced, Diversified & Expanded Core Pre-provision Net Revenue (PPNR) (1) Core PPNR more than doubled 2014 → 2021 Outlook: Steady annual expansion Diversified, Durable Revenues Adjusted Efficiency Ratio (1) $ billions Outlook for ongoing top-line growth Strong
Slide 13: Credit: High-Quality Assets, Disciplined Approach
4Q 2021 Preliminary Results Credit: High-Quality Assets, Disciplined Approach Consolidated Annual Net Charge-offs (NCOs) and Coverage Levels 2.03% CECL Outlook: Day 1 Consolidated NCOs ~1% Retail Auto: Asset Quality Commercial Auto: Asset Quality Secured, high utility asset. Adequately reserved for
Slide 14: Capital Deployment: Accretive, Disciplined Approach
4Q 2021 Preliminary Results Capital Deployment: Accretive, Disciplined Approach Adjusted Tangible Book Value per Share (1) 71% increase since 2014 Building Long-term Intrinsic Value Common Equity Tier 1 (CET1) Cumulative Shareholder Deployment Trends (2) $ billions $ billions (1) Represents a non-GA
Slide 15: 4Q and Full-Year 2021 Financial Results
4Q 2021 Preliminary Results 4Q and Full-Year 2021 Financial Results $ millions except per share data 4Q 21 3Q21 4Q20 2021 2020 Net financing revenue (ex. Core OID) (1) $ 1,663 $ 1,603 $ 1,312 $ 6,205 $ 4,739 (1) Core OID (9) (9) (9) (38) (36) Net financing revenue $ 1,654 $ 1,594 $ 1,303 $ 6,167 $ 4
Slide 16: Balance Sheet & Net Interest Margin
4Q 2021 Preliminary Results Balance Sheet & Net Interest Margin $ millions 4Q 21 3Q 21 4Q 20 2021 2020 Average Average Average Average Average Balance Yield Balance Yield Balance Yield Balance Yield Balance Yield Retail Auto Loan $ 77,979 6.61% $ 76,557 6.62% $ 73,401 6.57% $ 75,689 6.65% $ 72,805 6
Slide 17: Capital
4Q 2021 Preliminary Results Capital • 4Q 2021 CET1 ratio of 10.3% Capital Ratios and Risk-Weighted Assets – Reflects organic earnings expansion, growth in consumer and commercial assets and impacts associated with Fair Square closing 14.6% 14.8% 14.6% 14.1% 13.4% • Disciplined, dynamic capital manag
Slide 18: Asset Quality: Key Metrics
4Q 2021 Preliminary Results Asset Quality: Key Metrics Consolidated Net Charge-Offs (NCOs) Net Charge-Off Activity $ millions 4Q 20 1Q 21 2Q 21 3Q 21 4Q 21 Allowance as % of Annualized NCOs Annualized NCO Rate Retail Auto $ 186 $ 97 $ (5) $ 51 $ 94 550% 500% 1.60% 450% 400% 350% 1448% 1.40% Commerci
Slide 19: Asset Quality: Coverage & Reserves
4Q 2021 Preliminary Results Asset Quality: Coverage & Reserves Consolidated Coverage Retail Auto Coverage $ billions $ billions Reserve - $ Reserve - % Reserve - $ Reserve - % $3.3 Fair Square Day 1 Build $3.0 $3.0 $2.9 $3.4 $3.4 $3.3 $2.8 $2.8 $2.8 $2.8 $3.2 $3.2 $3.1 $2.8 $2.6 $3.1 2.85% 2.87% $2.
Slide 20: Ally Bank: Deposit & Customer Trends
4Q 2021 Preliminary Results Ally Bank: Deposit & Customer Trends • Retail Deposits of $135 billion grew $3.1 billion QoQ and Total Deposits: Retail & Brokered $10.3 billion YoY $ billions, EoP Retail Brokered / Other Customer Retention Rate Avg. Retail Portfolio Interest Rate – Total deposits of $14
Slide 21: Ally Bank: Leading, Accelerating & Diversified
4Q 2021 Preliminary Results Ally Bank: Leading, Accelerating & Diversified #1 2.5M 51 $135B 13 Largest All-Digital, Ally Bank Consecutive Quarters Retail Deposit Consecutive Years of Direct U.S. Bank(1) Deposit Customers of Customer Growth Balances Retail Deposit Growth Mortgage: Ally Home Brokerage
Slide 22: Auto Finance
4Q 2021 Preliminary Results Auto Finance • Auto pre-tax income of $839 million in 4Q 2021, reflecting Inc / (Dec) v. industry leading capabilities and well-positioned platform Key Financials ($ millions) 4Q 21 3Q 21 4Q 20 Net financing revenue $ 1,341 $ 12 $ 188 – Net financing revenue driven by str
Slide 23: Auto Finance: Agile Market Leader
4Q 2021 Preliminary Results Auto Finance: Agile Market Leader #1 #1 #1 #1 Leading Prime Auto Bank Floorplan Bank Retail Auto Dealer Satisfaction Insurance Provider Lender(1) Lender(2) Loan Outstandings(3) J.D. Power Award(4) (F&I, P&C Products) Consumer Originations & Applications Auto Balance Sheet
Slide 24: Insurance
4Q 2021 Preliminary Results Insurance • Insurance pre-tax income of $91 million and core pre-tax Inc / (Dec) v. income, excluding the change in fair value of equities, of Key Financials ($ millions) 4Q 21 3Q 21 4Q 20 $67 million in 4Q 2021 Premiums, service revenue earned and other $ 283 1 $ (7) VSC
Slide 25: Corporate Finance
4Q 2021 Preliminary Results Corporate Finance • Corporate Finance pre-tax income of $73 million and core Inc / (Dec) v. pre-tax income, excluding the change in fair value of Key Financials ($ millions) 4Q 21 3Q 21 4Q 20 equities, of $75 million in 4Q 2021 Net financing revenue $ 83 $ 6 $ 4 (1) Adjus
Slide 26: Mortgage Finance
4Q 2021 Preliminary Results Mortgage Finance Inc / (Dec) v. • Mortgage pre-tax income of $3 million in 4Q 2021 Key Financials ($ millions) 4Q 21 3Q 21 4Q 20 Net financing revenue $ 42 $ 6 $ 22 – Expanded net financing revenue reflects growth in asset balances reflecting DTC origination volume and re
Slide 27: Financial Outlook
4Q 2021 Preliminary Results Financial Outlook Structurally more profitable company Core ROTCE Progression (1) 24.3% Enhanced, Sustainable, FY’21 Reserve Reduction Return Drivers Fair Square +100-125bps Loan Growth 16-18%+ ✓ Steady, Organic Expansion Operating Discipline ✓ Annual PPNR Expansion 12.3%
Slide 28: Strategic Priorities
4Q 2021 Preliminary Results Strategic Priorities ‘Do It Right’ Purpose-Driven Culture Leading Auto, Insurance & Ally Bank products & platforms Lend Consumer & Consumer Checking, Commercial Auto Loans Savings &Savings & & Leases CD’s Checking Expanding customers & relationships across scalable platfo
Slide 29: Supplemental
4Q 2021 Preliminary Results Supplemental 29
Slide 30: Results by Segment
Supplemental 4Q 2021 Preliminary Results Results by Segment Core pre-tax income Walk Inc / (Dec) v. Segment Detail ($ millions) 2021 2020 4Q 21 3Q 21 4Q 20 2020 3Q 21 4Q 20 Automotive Finance $ 3,384 $ 1,285 $ 839 $ 825 $ 563 $ 2,099 $ 14 $ 276 Insurance 343 284 91 24 183 59 67 (92) Dealer Financial
Slide 31: Funding Profile Details
Supplemental 4Q 2021 Preliminary Results Funding Profile Details Funding Mix Deposit Mix Brokered / Other Retail CD MMA/OSA/Checking Deposits Secured Debt FHLB / Other Unsecured Debt 3.00% 8% 8% 7% 6% 4% 5% 1% 2.50% 15% 11% 3% 6% 58% 62% 65% 67% 70% 11% 2.00% 1.50% 85% 89% 75% 1.00% 66% 33% 30% 28%
Slide 32: Corporate and Other
Supplemental 4Q 2021 Preliminary Results Corporate and Other • Pre-tax loss of $107 million includes $97 million $ millions Inc / (Dec) v. provision impact from Fair Square Day 1 reserve build, Key Financials 4Q 21 3Q 21 4Q 20 Core pre-tax income of $10 million includes: Net financing revenue $ 173
Slide 33: Interest Rate Risk Sensitivities
Supplemental 4Q 2021 Preliminary Results Interest Rate Risk Sensitivities Net Financing Revenue Sensitivity Analysis (1) ($ millions) 4Q 21 3Q 21 Change in interest rates Gradual (2) Instantaneous Gradual (2) Instantaneous (3) -25 bps $ (9) $ (23) $ (27) $ (54) +100 bps $ 16 $ (37) $ 70 $ 53 Stable
Slide 34: Deferred Tax Asset
Supplemental 4Q 2021 Preliminary Results Deferred Tax Asset Deferred Tax Asset 4Q 21 3Q 21(1) ($ millions) Gross DTA Valuation Net DTA Net DTA Balance Allowance Balance Balance Net Operating Loss (Federal) $ 256 $ - $ 256 $ 7 Tax Credit Carryforwards 1,014 (710) 304 216 State/Local Tax Carryforwards
Slide 35: Notes on Non-GAAP Financial Measures
Supplemental 4Q 2021 Preliminary Results Notes on Non-GAAP 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, GAAP measures: Adjusted Earni
Slide 36: Notes on Non-GAAP Financial Measures
4Q 2021 Preliminary Results Notes on Non-GAAP Financial Measures 6) Core outstanding original issue discount balance (Core OID balance) is a non-GAAP financial measure for outstanding OID and is believed by management to help the reader better understand the balance removed from Core ROTCE and Adjus
Slide 37: Notes on Other Financial Measures
Supplemental 4Q 2021 Preliminary Results Notes on Other Financial Measures 1) Estimated Retail Auto Originated Yield is a forward-looking non-GAAP financial measure determined by calculating the estimated average annualized yield for loans originated during the period. At this time there currently i
Slide 38: Additional Notes
Supplemental 4Q 2021 Preliminary Results Additional Notes Page – 9 | Ally’s Differentiated Offerings (1) ‘#1 Dealer Satisfaction among Non-Captive Lenders with Sub-Prime Credit’ - Source: J.D. Power. (2) ‘Best Online Banks of 2021’ for Low Fees – Source: Money Magazine. (3) ‘Best Bank’ for Checking
Slide 39: Additional Notes
Supplemental 4Q 2021 Preliminary Results Additional Notes Page – 24 | Insurance (2) Acquisition and underwriting expenses includes corporate allocations of $21 million in 4Q 2021, $22 million in 3Q 2021, and $15 million in 4Q 2020. (3) Change in fair value of equity securities impacts the Insurance
Slide 40: GAAP to Core Results: Adjusted EPS - Annual
Supplemental 4Q 2021 Preliminary Results GAAP to Core Results: Adjusted EPS - Annual Adjusted Earnings per Share ("Adjusted EPS") FY 2021 FY 2020 FY 2019 FY 2018 FY 2017 FY 2016 FY 2015 Numerator ($ millions) GAAP net income / (loss) attributable to common shareholders $ 3,003 $ 1,085 $ 1,715 $ 1,26
Slide 41: GAAP to Core Results: Adjusted EPS - Quarterly
Supplemental 4Q 2021 Preliminary Results GAAP to Core Results: Adjusted EPS - Quarterly Adjusted Earnings per Share ("Adjusted EPS") QUARTERLY TREND 4Q 21 3Q 21 2Q 21 1Q 21 4Q 20 3Q 20 2Q 20 1Q 20 4Q 19 3Q 19 2Q 19 1Q 19 4Q 18 Numerator ($ millions) GAAP net income / (loss) attributable to common sh
Slide 42: GAAP to Core Results: Adjusted TBVPS - Annual
Supplemental 4Q 2021 Preliminary Results GAAP to Core Results: Adjusted TBVPS - Annual Adjusted Tangible Book Value per Share ("Adjusted TBVPS") FY 2021 FY 2020 FY 2019 FY 2018 FY 2017 FY 2016 FY 2015 Numerator ($ billions) GAAP shareholder's equity $ 17.1 $ 14.7 $ 14.4 $ 13.3 $ 13.5 $ 13.3 $ 13.4 P
Slide 43: GAAP to Core Results: Adjusted TBVPS - Quarterly
Supplemental 4Q 2021 Preliminary Results GAAP to Core Results: Adjusted TBVPS - Quarterly Adjusted Tangible Book Value per Share ("Adjusted TBVPS") QUARTERLY TREND 4Q 21 3Q 21 2Q 21 1Q 21 4Q 20 3Q 20 2Q 20 1Q 20 4Q 19 3Q 19 2Q 19 1Q 19 4Q 18 Numerator ($ billions) GAAP shareholder's equity $ 17.1 $
Slide 44: GAAP to Core Results: Core ROTCE - Annual
Supplemental 4Q 2021 Preliminary Results GAAP to Core Results: Core ROTCE - Annual Core Return on Tangible Common Equity ("Core ROTCE") FY 2021 FY 2020 FY 2019 FY 2018 FY 2017 FY 2016 FY 2015 Numerator ($ millions) GAAP net income / (loss) attributable to common shareholders $ 3,003 $ 1,085 $ 1,715
Slide 45: GAAP to Core Results: Core ROTCE - Quarterly
Supplemental 4Q 2021 Preliminary Results GAAP to Core Results: Core ROTCE - Quarterly Core Return on Tangible Common Equity ("Core ROTCE") QUARTERLY TREND 4Q 21 3Q 21 2Q 21 1Q 21 4Q 20 3Q 20 2Q 20 1Q 20 4Q 19 3Q 19 2Q 19 1Q 19 4Q 18 Numerator ($ millions) GAAP net income / (loss) attributable to com
Slide 46: GAAP to Core Results: Adjusted Efficiency Ratio - Annual
Supplemental 4Q 2021 Preliminary Results GAAP to Core Results: Adjusted Efficiency Ratio - Annual Adjusted Efficiency Ratio FY 2021 FY 2020 FY 2019 FY 2018 FY 2017 FY 2016 FY 2015 Numerator ($ millions) GAAP noninterest expense $ 4,110 $ 3,833 $ 3,429 $ 3,264 $ 3,110 $ 2,939 $ 2,761 Rep and warrant
Slide 47: GAAP to Core Results: Adjusted Efficiency Ratio - Quarterly
Supplemental 4Q 2021 Preliminary Results GAAP to Core Results: Adjusted Efficiency Ratio - Quarterly Adjusted Efficiency Ratio QUARTERLY TREND 4Q 21 3Q 21 2Q 21 1Q 21 4Q 20 Numerator ($ millions) GAAP noninterest expense $ 1,090 $ 1,002 $ 1,075 $ 943 $ 1,023 Insurance expense (263) (273) (272) (253)
Slide 48: Non-GAAP Reconciliation: Core Income - Annual
Supplemental 4Q 2021 Preliminary Results Non-GAAP Reconciliation: Core Income - Annual ($ millions) FY 2021 FY 2020 FY 2019 Core OID & Change in fair Core OID & Change in fair Core OID & Change in fair GAAP Repositioning value of equity Non-GAAP (1) GAAP Repositioning value of equity Non-GAAP (1) GA
Slide 49: Non-GAAP Reconciliation: Core Income - Annual
4Q 2021 Preliminary Results Non-GAAP Reconciliation: Core Income - Annual ($ millions) FY 2018 FY 2017 FY 2016 FY 2015 Core OID & Change in fair Core OID & Change in fair Core OID & Change in fair Core OID & Change in fair (1) (1) (1) GAAP Repositioning value of equity Non-GAAP GAAP Repositioning va
Slide 50: Non-GAAP Reconciliation: Core Income - Quarterly
Supplemental 4Q 2021 Preliminary Results Non-GAAP Reconciliation: Core Income - Quarterly ($ millions) 4Q 21 3Q 21 4Q 20 Change in fair Change in fair Change in fair (1) (1) GAAP Core OID value of equity Repositioning Non-GAAP GAAP Core OID value of equity Repositioning Non-GAAP GAAP Core OID value
Slide 51: Non-GAAP Reconciliations
Supplemental 4Q 2021 Preliminary Results Non-GAAP Reconciliations Net Financing Revenue (ex. Core OID) ($ millions) FY 2021 FY 2020 FY 2019 FY 2018 FY 2017 FY 2016 FY 2015 GAAP Net Financing Revenue [x] $ 6,167 $ 4,703 $ 4,633 $ 4,390 $ 4,221 $ 3,907 $ 3,719 Core OID 38 36 29 86 71 57 45 Net Financi
Slide 52: Non-GAAP Reconciliations
Supplemental 4Q 2021 Preliminary Results Non-GAAP Reconciliations Net Financing Revenue (ex. Core OID) QUARTERLY TREND ($ millions) 4Q 21 3Q 21 2Q 21 1Q 21 4Q 20 3Q 20 2Q 20 1Q 20 4Q 19 3Q 19 2Q 19 1Q 19 4Q 18 GAAP Net Financing Revenue [x] $ 1,654 $ 1,594 $ 1,547 $ 1,372 $ 1,303 $ 1,200 $ 1,054 $ 1