Slide 1: Ally Financial Inc. 2Q 2015 Earnings Review
Ally Financial Inc. 2Q 2015 Earnings Review July 28, 2015 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 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. This information is pr
Slide 3: Key Messages
Key Messages Diversifying our leading auto finance business Expanding franchise to drive long-term growth Improving shareholder returns Building a better financial services company 2Q 2015 Preliminary Results 3
Slide 4: Delivering on Financial Targets
Delivering on Financial Targets • Well on pace to achieve high $30s billion of auto originations in 2015 – $20.6 billion in 1H15, up 3% vs. 1H14 – More diversified origination mix • Core ROTCE(1) target of 9-11% – Full financial impact of capital actions yet to be realized – Priority to address rema
Slide 5: Second Quarter Highlights
Second Quarter Highlights • Net income of $182 million including pre-tax charge of $155 million related to debt repurchases • Core pre-tax income ex. repositioning items(1) of $435 million and Adjusted EPS(2) of $0.46 – Core ROTCE(3) of 8.2% and Adjusted Efficiency Ratio(3) of 46% – Net Interest Mar
Slide 6: Second Quarter Financial Results
Second Quarter Financial Results Increase/(Decrease) vs. ($ millions except per share data) 2Q 15 1Q 15 2Q 14 1Q 15 2Q 14 Net financing revenue (1) $ 927 $ 860 $ 912 $ 67 $ 15 Total other revenue (1)(2) 368 440 372 (72) (5) Provision for loan losses 140 116 63 24 77 Controllable expenses (2) 448 469
Slide 7: Results by Segment
Results by Segment • Auto Finance results driven by continued strong originations – Credit performance in line with expectations with provision increase due to strong loan growth – Retail loan growth and lower funding costs offset by lower net lease revenue and higher provision YoY – Higher asset ba
Slide 8: Net Interest Margin
Net Interest Margin • Net Interest Margin(1) up 11 bps QoQ driven by lower cost of funds – Higher consumer asset yields partially offset by lease balance decline and continued competition in commercial auto – Cost of funds(1) down 32 bps YoY and 8 bps QoQ driven by continued reduction of legacy high
Slide 9: Interest Rate Sensitivity
Interest Rate Sensitivity • Ally’s balance sheet primarily consists of short duration assets (~2 year weighted average life) funded primarily with deposits and securitizations • Ally’s interest rate sensitivity is dependent on the re-pricing assumptions of the deposit book in a rising rate environme
Slide 10: Deposits
Deposits • $1.1 billion of retail deposit growth in 2Q, with Stable, consistent growth of retail deposits balances up 13% YoY • Grew customer base 16% YoY with over 989,000 Ally Bank Deposit Levels ($ billions) primary customers $61.6 $60.5 $55.6 $56.4 $57.8 $9.9 $9.9 • Continue to build strong fran
Slide 11: Capital
Capital • Capital ratios are normalizing towards targeted Capital Ratios and Risk-Weighted Assets levels driven primarily by Series G / Series A actions and Risk Weighted Asset growth 14.0% 13.2% 13.5% 13.2% 13.0% 12.6% 12.3% 12.7% 12.5% • Preliminary fully phased-in Basel III Common 11.7% 10.4% 9.7
Slide 12: Asset Quality
Asset Quality Consolidated Net Charge-Offs Provision Expense 0.68% ($ millions) 0.60% 0.61% 344% Provision Expense 2Q 14 3Q 14 4Q 14 1Q 15 2Q 15 0.53% Retail Auto $ 97 $ 112 $ 168 $ 158 $ 152 0.34% 0.39% 224% Commercial Auto 2 (3) 7 (31) (20) 187% 155% 244% Mortgage (25) (7) (14) (5) 3 144% CF/Other
Slide 13: Auto Finance – Results
Auto Finance – Results • Auto Finance reported pre-tax income of $401 million Increase/(Decrease) vs. in 2Q, down $60 million YoY and up $70 million from Key Financials ($ millions) 2Q 15 1Q 15 2Q 14 the prior quarter Net financing revenue $ 850 $ 41 $ (34) Total other revenue 55 3 (7) – Net financi
Slide 14: Auto Finance – Key Metrics
Auto Finance – Key Metrics Consumer Originations Origination Mix ($ billions; % of $ originations) (% of $ originations) $11.8 $10.9 $10.8 20% $9.8 28% $9.2 20% $9.0 36% 37% 32% 19% 16% 28% 17% 22% 29% 17% 9% 15% 18% 20% 24% 12% 8% 10% 63% 63% 66% 27% 31% 36% 60% 52% 45% 8% 5% 6% 1Q 14 2Q 14 3Q 14 4
Slide 15: Insurance
Insurance • Pre-tax income of $15 million, up $38 million YoY Increase/(Decrease) vs. and down $63 million from the prior quarter Key Financials ($ millions) 2Q 15 1Q 15 2Q 14 Premiums, service revenue earned and other $ 241 $ 4 $ (11) – Comparative results primarily driven by weather- Losses and lo
Slide 16: Mortgage and Corporate and Other
Mortgage and Corporate and Other Mortgage Results Corporate and Other Results Increase/(Decrease) vs. Increase/(Decrease) vs. Key Financials ($ millions) 2Q 15 1Q 15 2Q 14 Key Financials ($ millions) 2Q 15 1Q 15 2Q 14 Net financing revenue (ex. OID) $ 48 $ 24 $ 48 Net financing revenue $ 15 $ - $ 3
Slide 17: Conclusion
Conclusion • Successfully diversifying auto business with attractive loan growth • Credit continues to perform in line with expectations • Deposit growth outpacing expectations • Expect to achieve year-end financial targets • Focused on continued franchise expansion – “One Ally” – Exploring addition
Slide 18: Supplemental Charts
Supplemental Charts
Slide 19: Second Quarter Financial Results
Supplemental Second Quarter Financial Results Increase/(Decrease) vs. ($ millions) 2Q 15 1Q 15 2Q 14 1Q 15 2Q 14 (1) Net financing revenue $ 927 $ 860 $ 912 $ 67 $ 15 (1)(2) Total other revenue 368 440 372 (72) (5) Provision for loan losses 140 116 63 24 77 (2) Controllable expenses 448 469 458 (21)
Slide 20: Funding
Supplemental Funding • Diversified funding strategy with opportunities to Total Asset Breakdown lower cost of funds ($ billions) – 68% of total assets reside at Ally Bank $149.9 $151.8 $153.5 $156.5 $149.2 – Deposits represent 45% of Ally’s funding • Efficient capital markets funding in 2Q 68% 68% 6
Slide 21: Capital and Liability Management
Supplemental Capital and Liability Management • Significant progress in bringing down high-cost unsecured debt and preferred securities Remaining High-Cost Debt (1) 9/30/14 6/30/15 Associated Maturity Date Coupon Face Value Matured Repurchased Face Value OID Dec-14 6.75% $ 765 $ (765) $ - $ - $ - De
Slide 22: Deferred Tax Asset
Supplemental Deferred Tax Asset Deferred Tax Asset 2Q 15 (1) 1Q 15 (1) ($ millions) Gross DTA/(DTL) Valuation Net DTA/(DTL) Net DTA/(DTL) Balance Allowance Balance Balance Net Operating Loss (Federal) $ 873 $ - $ 873 $ 913 Capital Loss (Federal) - - - 6 Tax Credit Carryforwards 1,922 (478) 1,444 1,4
Slide 23: Notes on non-GAAP and other financial measures
Supplemental Notes on non-GAAP and other financial measures $ millions 2Q 15 1Q 15 2Q 14 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 $ 916 $ 11 $ 927 $ 850 $ 10 $ 860 $ 866
Slide 24: Notes on non-GAAP and other financial measures
Supplemental Notes on non-GAAP and other financial measures 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 ("OID") amortization expense. 2) Repositi