Ally Financial Inc. · NYSE:ALLY
Ally Financial — Q2 2022 Earnings Presentation
39 slides from Ally Financial's earnings presentation, Jul 19, 2022
Slide 1: Ally Financial Inc. 2Q 2022 Earnings Review
2Q 2022 Preliminary Results Ally Financial Inc. 2Q 2022 Earnings Review July 19, 2022 Contact Ally Investor Relations at (866) 710-4623 or investor.relations@ally.com 1
Slide 2: Forward-Looking Statements and Additional Information
2Q 2022 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: Quarterly
2Q 2022 Preliminary Results GAAP & Core Results: Quarterly ($ millions, except per share data) 2Q 22 1Q 22 4Q 21 3Q 21 2Q 21 GAAP net income attributable to common shareholders (NIAC) $ 454 $ 627 $ 624 $ 683 $ 900 Core net income attributable to common shareholders (1)(2) $ 570 $ 687 $ 705 $ 782 $ 8
Slide 4: Purpose-Driven Culture & Priorities
2Q 2022 Preliminary Results Purpose-Driven Culture & Priorities ‘Do It Right’ Culture and Values customers Relentless focus on our dealers, consumers & commercial clients employees digitally Ongoing prioritization of our financially teammates and their well-being personally communities Driving meani
Slide 5: 2Q 2022 Highlights
2Q 2022 Preliminary Results 2Q 2022 Highlights Focused Execution Leading, Growing Businesses Durable Returns $1.76 23.2% $2.2B 9.6% Adjusted Core Adjusted Total CET1 EPS(1) ROTCE(1) Net Revenue(1) Capital Ratio • Consistent execution across Ally’s Auto, Insurance and Digital bank platforms, strength
Slide 6: Strong Value Proposition
2Q 2022 Preliminary Results Strong Value Proposition Product growth and customer expansion through differentiated products and services Proven Scale & Growing Digital-First Driving Deeper Value >10.5 MILLION 99% 2 9 out of 10 customers 1 bank digital interactions new deposit customers 3 (deposits an
Slide 7: Consumer Snapshot
2Q 2022 Preliminary Results Consumer Snapshot Positioning for uncertain outlook; consumer trends normalizing from strong starting point Ally Savings Account Balance & Portfolio Mix by Average Monthly Ally Consumer Auto Applications Income Segment by Income Segment Change in avg. OSA balance (1Q’20 t
Slide 8: Balance Sheet Foundation
2Q 2022 Preliminary Results Balance Sheet Foundation Common Equity Tier 1 (CET1) Allowance For Loan Losses ($ billions) ($ billions) CET1 % 2Q’22 ~$4.0B excess above 7% (Reg. Min. + prelim SCB) CET1 > 4.5% Reg. Min. 4.5% Reg. Min. Note: For more details on the final rules to address the impact of CE
Slide 9: 2Q 2022 Financial Results
2Q 2022 Preliminary Results 2Q 2022 Financial Results Consolidated Income Statement 2Q 22 1Q 22 2Q 21 1Q 22 2Q 21 ($ millions, except per share data) Net financing revenue (ex. Core OID) (1) $ 1,774 $ 1,703 $ 1,556 $ 71 $ 218 (1) Core OID (10) (10) (9) (0) (1) Net financing revenue $ 1,764 $ 1,693 $
Slide 10: Balance Sheet & Net Interest Margin
2Q 2022 Preliminary Results Balance Sheet & Net Interest Margin 2Q 22 1Q 22 2Q 21 Average Average Average Balance Yield Balance Yield Balance Yield ($ millions) Retail Auto Loan $ 79,695 6.82% $ 78,224 6.61% $ 74,662 6.70% Retail Auto Loan (ex. hedge impact) 6.85% 6.75% 6.92% Auto Lease (net of depr
Slide 11: Capital
2Q 2022 Preliminary Results Capital • 2Q 2022 CET1 ratio of 9.6% Capital Ratios and Risk-Weighted Assets – Strong earnings supporting loan growth across portfolios • Consistent, strong shareholder distributions Total Capital – Executed $600 million of repurchases in 2Q (~$1.2B YTD) Ratio Tier 1 Rati
Slide 12: Asset Quality: Key Metrics
2Q 2022 Preliminary Results Asset Quality: Key Metrics Consolidated Net Charge-Offs (NCOs) Net Charge-Off Activity ($ millions) 2Q 21 3Q 21 4Q 21 1Q 22 2Q 22 Retail Auto $ (5) $ 51 $ 94 $ 113 $ 108 Commercial Auto - - - (1) (1) Annualized NCO Rate Mortgage Finance 1 - - - (1) NCOs ($M) Corporate Fin
Slide 13: Asset Quality: Coverage & Reserves
2Q 2022 Preliminary Results Asset Quality: Coverage & Reserves Consolidated Coverage Retail Auto Coverage ($ billions) ($ billions) Reserve (%) Reserve (%) Reserve ($) Reserve ($) Note: Coverage rate calculations exclude fair value adjustment for loans in hedge accounting relationships. Note: Covera
Slide 14: Ally Bank: Deposit & Customer Trends
2Q 2022 Preliminary Results Ally Bank: Deposit & Customer Trends • Total deposits of 140.4 billion, up $1.3 billion YoY Total Deposits: Retail & Brokered ($ billions; EoP) – Retail deposits of $131.2 billion, down $4.8 billion QoQ; up $1.9 billion YoY – 2Q retail deposit balance decline driven by el
Slide 15: Ally Bank: Leading, Growing & Diversified
2Q 2022 Preliminary Results Ally Bank: Leading, Growing & Diversified #1 2.5M 53 $131B 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 • Momentum in newly acquired cons
Slide 16: Auto Finance
2Q 2022 Preliminary Results Auto Finance • Auto pre-tax income of $600 million Inc / (Dec) v. Key Financials ($ millions) 2Q 22 1Q 22 2Q 21 – Pre-tax income, down $125 million QoQ, primarily driven by higher Net financing revenue $ 1,301 $ 6 $ (32) provision for credit losses from robust consumer or
Slide 17: Used Vehicle Value Impact
2Q 2022 Preliminary Results Used Vehicle Value Dynamics Limited supply and strong demand has driven used vehicle values +~60% vs. 2019 with offsetting impacts across Ally P&L 2Q Pre-tax Impact H / (L) vs. 2019 + Favorable charge-off severity Retail NCOs ~$50M driven by ↑ auction proceeds (Used vehic
Slide 18: Auto Finance: Agile Market Leader
2Q 2022 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) Dealer Relationships & Consumer Applications Auto Balan
Slide 19: Insurance
2Q 2022 Preliminary Results Insurance • Insurance pre-tax loss of $122 million and core pre-tax Inc / (Dec) v. income of $14 million Key Financials ($ millions) 2Q 22 1Q 22 2Q 21 Premiums, service revenue earned and other $ 285 1 $ 2 VSC Losses 38 5 5 – $285 million of earned premiums represents hig
Slide 20: Corporate Finance
2Q 2022 Preliminary Results Corporate Finance • Corporate Finance pre-tax income of $60 million Inc / (Dec) v. Key Financials ($ millions) 2Q 22 1Q 22 2Q 21 – Provision increase YoY driven by higher specific reserves and a Net financing revenue $ 77 $ (6) $ - recovery in the prior year Adjusted tota
Slide 21: Mortgage Finance
2Q 2022 Preliminary Results Mortgage Finance • Mortgage pre-tax income of $6 million Inc / (Dec) v. Key Financials ($ millions) 2Q 22 1Q 22 2Q 21 – Net financing revenue, up $33 million YoY, reflecting growth in Net financing revenue $ 56 $ 3 $ 33 asset balances and decelerating prepayment activity
Slide 22: Strategic Priorities
2Q 2022 Preliminary Results Strategic Priorities ‘Do It Right’ Purpose-Driven Culture Optimizing leading Auto, Insurance & Ally Bank products & platforms Engaging customers with newer products across scalable platforms Differentiating through deep expertise & digital-first capabilities Driving disci
Slide 23: Supplemental
2Q 2022 Preliminary Results Supplemental 23
Slide 24: Results by Segment
Supplemental 2Q 2022 Preliminary Results Results by Segment Core pre-tax income Walk Inc / (Dec) v. ($ millions) Segment Detail 2Q 22 1Q 22 2Q 21 1Q 22 2Q 21 Automotive Finance $ 600 $ 725 $ 917 $ (125) $ (317) Insurance (122) 13 87 (135) (209) Dealer Financial Services $ 478 $ 738 $ 1,004 $ (260) $
Slide 25: Funding Profile Details
Supplemental 2Q 2022 Preliminary Results Funding Profile Details Funding Mix Deposit Mix Unsecured FHLB / Other Brokered / Other Secured Retail CD Deposits MMA/OSA/ Checking Note: Totals may not foot due to rounding. Note: Other includes sweep deposits, mortgage escrow and other deposits. Totals may
Slide 26: Corporate and Other
Supplemental 2Q 2022 Preliminary Results Corporate and Other ($ millions) Inc / (Dec) v. • Pre-tax income of $90 million, Core pre-tax income of Key Financials 2Q 22 1Q 22 2Q 21 $101 million includes: Net financing revenue $ 310 $ 65 $ 211 Total other revenue 59 (7) (19) Total net revenue $ 369 $ 58
Slide 27: Interest Rate Risk Sensitivities
Supplemental 2Q 2022 Preliminary Results Interest Rate Risk Sensitivities Net Financing Revenue Sensitivity Analysis (1) ($ millions) 2Q 22 1Q 22 (2) (2) Change in interest rates Gradual Instantaneous Gradual Instantaneous -25 bps $ (5) $ 26 $ 8 $ 38 +100 bps $ 26 $ (79) $ (17) $ (135) Stable rate e
Slide 28: Deferred Tax Asset
Supplemental 2Q 2022 Preliminary Results Deferred Tax Asset Deferred Tax Asset 2Q 22(1) 1Q 22 Gross DTA Valuation Net DTA Net DTA Balance Allowance Balance Balance Net Operating Loss (Federal) $ 516 $ - $ 516 $ 660 Tax Credit Carryforwards 1,123 (729) 394 350 State/Local Tax Carryforwards 288 (137)
Slide 29: Notes on Non-GAAP Financial Measures
Supplemental 2Q 2022 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 30: Notes on Non-GAAP Financial Measures
Supplemental 2Q 2022 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 RO
Slide 31: Notes on Other Financial Measures
Supplemental 2Q 2022 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 32: Additional Notes
Supplemental 2Q 2022 Preliminary Results Additional Notes Page – 6 | Strong Value Proposition (1) Customers include on-balance sheet Auto, U.S. and Canadian Insurance, active Depositors, on-balance sheet Ally Home DTC Mortgage, Ally Lending, Ally Invest, and Ally Credit Card. (2) Bank digital intera
Slide 33: Additional Notes
Supplemental 2Q 2022 Preliminary Results Additional Notes Page – 19 | Insurance (2) Acquisition and underwriting expenses includes corporate allocations of $22 million in 2Q 2022, $23 million in 1Q 2022, and $20 million in 2Q 2021. (3) Change in fair value of equity securities impacts the Insurance
Slide 34: GAAP to Core Results: Adjusted EPS
Supplemental 2Q 2022 Preliminary Results GAAP to Core Results: Adjusted EPS Adjusted Earnings per Share ("Adjusted EPS") QUARTERLY TREND 2Q 22 1Q 22 4Q 21 3Q 21 2Q 21 1Q 21 4Q 20 3Q 20 2Q 20 1Q 20 4Q 19 3Q 19 2Q 19 Numerator ($ millions) GAAP net income attributable to common shareholders $ 454 $ 62
Slide 35: GAAP to Core Results: Adjusted TBVPS
Supplemental 2Q 2022 Preliminary Results GAAP to Core Results: Adjusted TBVPS Adjusted Tangible Book Value per Share ("Adjusted TBVPS") QUARTERLY TREND 2Q 22 1Q 22 4Q 21 3Q 21 2Q 21 1Q 21 4Q 20 3Q 20 2Q 20 1Q 20 4Q 19 3Q 19 2Q 19 Numerator ($ billions) GAAP shareholder's equity $ 14.0 $ 15.4 $ 17.1
Slide 36: GAAP to Core Results: Core ROTCE
Supplemental 2Q 2022 Preliminary Results GAAP to Core Results: Core ROTCE Core Return on Tangible Common Equity ("Core ROTCE") QUARTERLY TREND 2Q 22 1Q 22 4Q 21 3Q 21 2Q 21 1Q 21 4Q 20 3Q 20 2Q 20 1Q 20 4Q 19 3Q 19 2Q 19 Numerator ($ millions) GAAP net income attributable to common shareholders $ 45
Slide 37: GAAP to Core Results: Adjusted Efficiency Ratio
Supplemental 2Q 2022 Preliminary Results GAAP to Core Results: Adjusted Efficiency Ratio Adjusted Efficiency Ratio QUARTERLY TREND 2Q 22 1Q 22 4Q 21 3Q 21 2Q 21 Numerator ($ millions) GAAP noninterest expense $ 1,138 $ 1,122 $ 1,090 $ 1,002 $ 1,075 Rep and warrant expense - - - - - Insurance expense
Slide 38: Non-GAAP Reconciliation: Core Income
Supplemental 2Q 2022 Preliminary Results Non-GAAP Reconciliation: Core Income ($ millions) 2Q 22 1Q 22 2Q 21 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 of equity Re
Slide 39: Non-GAAP Reconciliations
Supplemental 2Q 2022 Preliminary Results Non-GAAP Reconciliations Net Financing Revenue (ex. Core OID) QUARTERLY TREND ($ millions) 2Q 22 1Q 22 4Q 21 3Q 21 2Q 21 1Q 21 4Q 20 3Q 20 2Q 20 1Q 20 4Q 19 3Q 19 2Q 19 GAAP Net Financing Revenue [x] $ 1,764 $ 1,693 $ 1,654 $ 1,594 $ 1,547 $ 1,372 $ 1,303 $ 1