Ally Financial Inc. · NYSE:ALLY
Ally Financial — Investor Day (July 2014)
63 slides from Ally Financial's investor day presentation, Jul 30, 2014
Slide 1: 2014 Ally Financial ABS Investor Day
2014 Ally Financial ABS Investor Day July 30, 2014
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. In the presentation th
Slide 3: Brad Brown - Corporate Treasurer, Ally Financial
Brad Brown - Corporate Treasurer, Ally Financial
Slide 4: Agenda
10:00 a.m. Opening Remarks Brad Brown Corporate Treasurer, Ally Financial 10:15 a.m. Automotive Business Tim Russi President, Auto Finance Andrea Riley Chief Marketing Officer, Dealer Financial Services 11:30 a.m. Dealer Remarks Bill O’Flanagan General Manager of Reedman Toll and majority shareholde
Slide 5: Ally Financial overview
• Over 16,000 dealer relationships • $110 billion of auto earning assets • Auto originations of $10.9 billion A Leading U.S. Direct Bank Franchise – Continued momentum of stable deposit growth Strong and Stable Financial Profile – Streamlined operations and balance sheet Premier U.S. Auto Finance Fr
Slide 6: Strategic transformation and TARP exit progress
Positioned for continued improved shareholder returns and full TARP exit Strategic Transformation Received confirmation of ResCap bankruptcy plan Received non-objection to CCAR plan Called $10.2 billion of legacy high cost debt since 2Q13 Completed $1.3 billion private placement of common equity
Slide 7: Core income, net financing revenue, deposits and efficiency
Core Income Net Financing Revenue & NIM Deposits & Cost of Funds (ex. OID) Adj. Efficiency Ratio $ in millions $697 $689 $801 $841 $865 $912 2.1% 2.0% 2.3% 2.4% 2.5% 2.6% 1Q 13 2Q 13 3Q 13 4Q 13 1Q 14 2Q 14 Net Financing Revenue Net Interest Margin $ in millions $207 $211 $271 $161 $339 $417 1Q 13 2
Slide 8: Auto Finance Key Metrics
($ billions; % of $ originations) $9.7 $9.8 $9.6 $8.2 $9.2 $10.9 61% 64% 69% 66% 66% 63% 13% 15% 16% 18% 19% 20% 26% 21% 15% 16% 15% 17% 1Q 13 2Q 13 3Q 13 4Q 13 1Q 14 2Q 14 GM Chrysler Other Consumer Assets Commercial Assets Consumer Originations Origination Mix (% of $ originations) 14% 9% 8% 26% 2
Slide 9: Funding and Liquidity
($ in millions) Average Outstanding Balance (1) Quarterly Interest Expense Annualized Cost of Funds LT Unsecured Debt 25,367$ 377$ 5.96% Secured Debt 40,843 123 1.21% Other Borrowings (2) 9,129 16 0.70% Deposits 55,626 166 1.20% Total / Weighted Average 130,965$ 682$ 2.09% ($ billions) $3.0 $ .8 $0.
Slide 10: Tim Russi and Andrea Riley
Tim Russi - President, Auto Finance Andrea Riley - Chief Marketing Officer, Dealer Financial Services
Slide 11: The Mission: Simple - Change Everything
Multi-line / International Manufacturer Centric New Subvented Vehicle Volume Driven Single Manufacturer Captive Finance Company U.S. Auto Centric Dealer Centric New & Used Competitive Risk-reward Metric Driven Diversified Relationships Market-Driven Financial Holding Company The Mission: Simple - Ch
Slide 12: Transitioned to a Successful Market Driven Competitor
GM Dealer Channel Chrysler Dealer Channel Non GM/Chrysler Dealers (“Growth Channel”) • Long standing relationship with General Motors and its dealers • Prior operating agreement expired in December 2013 and new operating agreement signed March 1, 2014 • General framework for dealer and consumer fina
Slide 13: Ally is More Than a Finance Company
Ally is More Than a Finance Company… Comprehensive suite of products Deep industry focus and knowledge Large and highly tenured sales team Innovative and unique set of services and tools We aim to be a strategic asset to our OEMs and Dealers Highly engaged dealer advocates Strong & Focused 13
Slide 14: The Ally Difference
Deep understanding and focus on the auto industry – Unlike anyone else - This is ALL WE DO Largest floorplan provider in the industry Industry leading lessor with $18.8 billion in leases SmartAuction Industry leading remarketing tool and inventory management services. Insurance From floorplan insura
Slide 15: Most Comprehensive Suite of Products in the Industry
• Inventory Management • Instant Funding • Auction Services Ally’s Innovative Offerings Consumer • Retail Finance • Lease • Business Vehicles Ally’s Suite of Products Dealer Products • Wholesale • Mortgage • Cap Loan • DRAC, Fleet • Specialty Products Unique/Specialty • Insurance • SmartAuction • F
Slide 16: Innovative / Unique Services and Tools
More than auto finance • Full scale marketing investment • Designated staff with extensive agency experience • Marketing $$ commitment • National and local solutions • On-going consultation services Marketing • Account Center mobile app • SmartAuction mobile app • Insurance menu app • Targeted landi
Slide 17: Large Team of Experts
Regional Business Centers Chicago, IL - Pittsburgh, PA Atlanta, GA - Dallas, TX - Costa Mesa, CA - Jacksonville, FL – Lewisville, TX Five Regions Large Team of Experts 17 • Strong, tenured associates with deep auto focus • Over 1,800 local dealer consultants • Seven regional business centers managed
Slide 18: Our Philosophy = All-In With Our Dealers
We focus on promoting our dealer customer brands Our Philosophy = "All-In" With Our Dealers 18 Automotive News Print Ads Website Banners Retail Mailings Lifecycle Communications
Slide 19: Ally Brand House
Ally Brand House Our Tagline - Our Foundation • Ally, It’s more than our name, it’s our promise. What sets us apart • Intellect - Insight, innovation, unmatched automotive intelligence • Passion – A love of this business and a driving desire to make our dealers successful • Trust – A commitment to d
Slide 20: The Customer Journey
Early Lifecycle Middle Engagement Retention • Social media • Welcome kits • Welcome emails • P.O.P. materials • Billing statements • Web banners • Dealer coupons • Email touches • Customer surprise and delight • Payoff triggers • Lease retention kits • Targeted landing pages The Customer Journey 20
Slide 21: Customer touch-points examples
Dealer log-off banner Payoff Trigger Targeted Digital Coupons Customer Touch-points Personalized Landing Page 21
Slide 22: Social Content for Dealer Customers
Social Media Ally Auto Blog, Facebook, Twitter and Google+ By providing quality content, we can demystify the auto financing process and help educate consumers on how to best research, shop and maintain their vehicles. 22 Social Content for Dealer Customers
Slide 23: Tools to Help Our Dealers Sell
Generic & Customizable Customer Brochures Customizable Hang-Tag Lease Contract Guide (for new dealer employees) “No-charge” items on Ally’s eStore: Customizable Customer Folder DP&S Brochures & Placemats Tools to Help Our Dealers Sell 23
Slide 24: Being a Marketplace Leader
Best Practices SmartAuction App Ally Auto App Ally Dealer Rewards Being a Marketplace Leader Automotive News Roundtables 24
Slide 25: Recognizing and Supporting Local Dealers
Recognizing and Supporting Local Dealers • Customized regional activations to support dealer sales 25 • Time Dealer of the Year
Slide 26: Bill O'Flanagan - Dealer Remarks
Bill O’Flanagan - General Manager of Reedman Toll and Majority Shareholder/Dealer of Springfield Auto World and Abington Auto World
Slide 27: Steve Merritt and Evan Noulas
Steve Merritt - Chief Risk Executive, Consumer Auto Evan Noulas - President, Ally Servicing; Chief Procurement Officer, Ally Financial
Slide 28: Origination and Underwriting Application Flow
Retail Customer Dealer Ally Financial Ally Bank Origination and Underwriting Application Flow 28 1. Customer applies for financing at dealership 2. Dealer collects all application information 3. Dealer verifies customer information and address through its own red flags and customer identification pr
Slide 29: Credit Strategy Evolution
Underwriting strategy has evolved since Ally became a Bank Holding Company Credit Strategy Evolution Category Legacy Current • Underwriting Strategy • Underwriting based on dealer level average odds targets • Simplified approach • Decentralized • Vendor developed scorecards • Data-driven underwritin
Slide 30: Ally Financial Retail Asset Quality Trends
US Retail (Loans Only) Delinquency Trends $ in millions $843 $999 $1,188 $1,325 $904 $1,174 1.53% 1.78% 2.10% 2.35% 1.59% 2.02% 0.00% 0.50% 1.00% 1.50% 2.00% 2.50% 3.00% 3.50% $0 $200 $400 $600 $800 $1,000 $1,200 $1,400 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 Delinquency $ Delinquency % Note: Includes accruin
Slide 31: Ally Bank Retail Asset Quality Trends
US Ally Bank Retail (Loans Only) Delinquency Trends $ in millions $176 $189 $225 $248 $181 $228 0.61% 0.65% 0.76% 0.84% 0.60% 0.73% 0.00% 0.20% 0.40% 0.60% 0.80% 1.00% 1.20% 1.40% $0 $50 $100 $150 $200 $250 $300 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 Delinquency $ Delinquency % US Ally Bank Consumer (Loans a
Slide 32: Ally Non-Bank Retail Asset Quality Trends
US Ally Non-Bank Consumer (Loans and Leases) Outstandings Trends $ in millions $0 $5,000 $10,000 $15,000 $20,000 $25,000 $30,000 $35,000 $40,000 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 Leases $ Retail Loans $ $32,838 $33,197 $33,201 $32,529 $32,195 $31,914 US Ally Non-Bank Retail (Loans Only) Delinquency Tren
Slide 33: Servicing Overview...Today
Mission: Profitably deliver a premier auto-finance servicing experience to our customers What we do • Customer Care • Collections • Recovery • Remarketing Who we service • Indirect auto financing … all dealers, consumers, asset-backed investors Customer touch points • U.S. auto consumers • U.S. deal
Slide 34: Servicing Overview...What We Do
Submit Customer Credit Application Underwriting Funding On-board Accts in CARS Billing & Payments, Docs, Titles Remarketing Mail Phone Internet Dealer /Consumer Request Fulfillment Collections Repo Recovery Dealer Ally Front-end Ally Servicing … Level 1 End-to-End Account Management Sales/ Marketing
Slide 35: US Servicing Footprint
Corporate Center Asset Performance Remarketing Loss Mitigation Account Servicing Customer Service Call Center US Servicing Footprint 35 Consumer Credit Risk Ally Auto Servicing
Slide 36: Collections - Strategy Design
36 Collections – Strategy Design Consumer Credit Risk Ally Auto Servicing Days Past Due (dpd) Monthly Refreshed CB Score Collection Score Account Balance New Acct Default Risk models drive treatment segmentation and timing Test/Control segmentation Leveraging Vendor Partners and Internal Resources t
Slide 37: Loss Mitigation: Post Charge-off Recoveries
Post Charge off Recoveries – Sophisticated account routing and vendor management Loan Workout Repossession • Dedicated “workout” team working with customers to develop solutions and mitigate losses • Centrally managed repossession activities using a geographically dispersed network Asset Recovery Ce
Slide 38: Compliance and controls measurements
Measurements reinforce awareness and actions •Ongoing communication to create awareness & understanding Monthly Scorecard Sections •Monthly risk/compliance review with leaders •Competitor benchmarking, best practice sharing, intelligence •Dedicated Quality team embedded at each field site • Individu
Slide 39: Greg Skurkovich and Steve Kapusta
Greg Skurkovich – Lease Executive Steve Kapusta - Vice President, Dealership Online Services
Slide 40: Ally Lease Overview
Ally Lease Overview 40 Leasing & Residual Setting Cadillac Escalade Example Remarketing • Ally has been originating and servicing lease assets for over 30 years • Ally has securitized lease assets since 2003 through both public and private issuances • Unique position as a 3rd party lessor – Propriet
Slide 41: Residual Setting Analysis and Process
Key to getting the economics right is a thorough and analytical residual setting process Residual Setting - Legacy Residual Setting - Current • Residual Value Setting – Legacy – Set at 100% of ALG projection – Residual Enhancements by OEM • Recoverable residual support by OEM: drove lower customer p
Slide 42: Ally Lease Product - Governance and Controls
• Valuation Governance/Controls - A cross functional valuation council reviews and recommends residual values • Voting members include AFI and Bank leaders, from Risk, Finance and Pricing Teams - Internal model validation • Valuation Oversight - Internal audit - Annual regulatory exams Ally Lease Pr
Slide 43: Residual Setting Approach
Residual Setting Approach 43 Leasing & Residual Setting Cadillac Escalade Example Remarketing Quantitative Qualitative Residual Setting/Auto Valuation is comprised of two distinct parts 2013 Chevy Traverse evaluation– Ft. Washington, Oct. 2012 • The Statistical Model is in its 2nd generation and is
Slide 44: Competitive Segment Review
44 Competitive Segment Review Leasing & Residual Setting Cadillac Escalade Example Remarketing
Slide 45: Remarketing Analytics
• The remarketing analytics team is responsible for optimizing remarketing proceeds through: - Analysis and execution of remarketing strategies • The remarketing analytics team applies data-driven approaches to optimize net proceeds - “Champion-Challenger” testing to assess all aspects of remarketin
Slide 46: Remarketing - SmartAuction & Physical Auction
• SmartAuction is an industry leading wholesale Internet auction, offering dealers access to a virtual inventory of quality used vehicles – Launched in 2000, more than 4.4 million vehicles have been sold through SmartAuction to franchise and non-franchise dealers throughout the United States • Diver
Slide 47: Dealership Online Services
Performance Development Center (PDC) Relationship Management Center (RMC) SmartAuction Providing a comprehensive and unique set of online products and services 47 Dealership Online Services Leasing & Residual Setting Cadillac Escalade Example Remarketing
Slide 48: Tom Elkins and Tom Bennert
Tom Elkins - Vice President, Pricing and Quality Tom Bennert - Chief Risk Executive, Commercial Auto
Slide 49: Industry Trends
Industry Trends 49 Commercial Business Commercial Risk Light Vehicle Sales Continues to Grow * SAAR = Seasonally Adjusted Annual Rate Industry Per Vehicle Incentive Spending Average Vehicle Age Supporting Strong Demand 9.0 9.5 10.0 10.5 11.0 11.5 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 201
Slide 50: Transaction Prices & Dealer Health
Used Vehicle Transaction Price New Vehicle Transaction Price as a % of MSRP Transaction Prices & Dealer Health 50 Commercial Business Commercial Risk 750 742 617 510 623 724 812 877 896 400 500 600 700 800 900 1,000 Source: Automotive News New Unit Sales Per Franchise 0.0% 0.5% 1.0% 1.5% 2.0% 2.5% $
Slide 51: How We Compete
We aim to be a strategic asset to our OEMs and Dealers How We Compete 51 Commercial Business Commercial Risk • Focus on the Dealer’s business: customized solutions to meet their needs • Create loyalty with our customers through service and performance • Provide access to broad and deep products and
Slide 52: What does it mean to be Dealer Centric?
What does it mean to be Dealer Centric? Focused on the smallest detail to support the Dealer’s business Be Dealer Centric 52 Commercial Business Commercial Risk • Being high touch with our Dealer customers Local presence from over 1,800 dealer consultants Large and highly tenured sales team in t
Slide 53: Wholesale floorplan relationship
• Wholesale relationship is foundational in the Ally dealer-centric strategy and essential to dealer customers • Average Ally US wholesale relationship spans 15 years • Market competition and pricing have intensified due to bank appetite for yield from low risk assets • Floorplan dealers administere
Slide 54: Portfolio Performance
• Ally’s Great Recession portfolio loss rates were very favorable relative to industry C&I portfolio loss rates – Peak loss rate of 35 bp in 2009 • Portfolio has returned to historical loss rates as legacy asset liquidations completed – Total portfolio loss rates < 5 bp since 2011 – Current frequenc
Slide 55: Floorplan Financing Summary
Ally Financial OEM Dealer Dealer Purchase Process 1. Dealer requests shipment from OEM 2. If dealer is in good standing, OEM ships vehicles to dealer 3. Ally Financial Pays OEM on behalf of the dealer 4. Dealer is obligated to pay Ally Financial the principal amount financed plus interest accruing t
Slide 56: Ryan Farris - Structured Funding Executive
Ryan Farris - Structured Funding Executive
Slide 57: Diversified Funding Profile
• Expect consistent growth in deposit funding • Transitioning to a bank funding model Non-Bank Assets 32% Ally Bank Assets 68% 2Q 14 Non-Bank Assets 89% Ally Bank Assets 11% 2007 Secured Debt 44% Unsecured Debt 49% Dep osit s 7% 2007 ST LT Total Secured Unsecured Deposits Secured Unsecured Deposits
Slide 58: Ally's Term ABS Platforms
• Ally Bank currently sponsors 3 term ABS platforms for its retail, lease, and floorplan assets • Ally Financial re-entered the ABS market in 2013 with a non-prime retail program Platform Characteristics Ally Bank Ally Financial Total Issuance Asset Class Prime Retail Instalment Contract Lease Deale
Slide 59: Non-prime retail program (AFIN) update
• Completed Six Transactions Since 2013 for $6.1BN in Funding • Consistent Program Features ‒ All transactions have included a one-year revolving period 2 deals now in amortization period ‒ Initial collateral profile and asset additions have not changed ‒ Enhancement structure has remained unchang
Slide 60: ALLYA Collateral Comparison and performance
• Used and Extended Term increase is driven by diversification strategy 2010 2011 2012 2013 2014 FICO 763 758 754 743 746 > 60 Months 51.4% 53.9% 52.3% 62.0% 63.6% Used 10.3% 11.1% 15.5% 22.0% 26.1% LTV 92.5% 92.5% 93.9% 96.2% 95.8% ALLYA Collateral Comparison 0.00% 0.10% 0.20% 0.30% 0.40% 1 3 5 7 9
Slide 61: ALLYL lease ABS performance
0% 3% 6% 9% 12% 15% 18% 21% 24% R e si dua l G ai n /( Lo ss ) R at io Residual Gain/(Loss) on Returned Vehicles as % of Returned Vehicle ABS Value ALLYL 2012-SN1 ALLYL 2013-SN1 ALLYL 2014-SN1 • Ally’s top 3 model concentration in ALLYL transactions are under 30% compared to 40% - 80% for other rece
Slide 62: AMOT Program Update
10% 15% 20% 25% 30% 35% 40% 45% 50% Monthly Payment Rates 3Mo Avg. Monthly Payment Rates and Triggers 1 2 3 4 5 6 - 1,000 2,000 3,000 4,000 5,000 6,000 2013 2014 2015 2016 2017 $ (In m ill ion s) Amount # of Term Deals AMOT Maturity Profile Class % of Collateral Credit Enhancement Class A 74.50% 26.
Slide 63: Brad Brown - Corporate Treasurer, Ally Financial
Brad Brown - Corporate Treasurer, Ally Financial