Slide 1: Ally Financial Inc. 4Q 2018 Earnings Review
Ally Financial Inc. 4Q 2018 Earnings Review January 30, 2019 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 - Annual
GAAP and Core Results - Annual ($ millions except per share data) 2018 2017 2016 2015 2014 GAAP net income (loss) attributable to common shareholders ("NIAC") $ 1,263 $ 929 $ 1,037 $ (1,282) $ 882 (1)(2) Core net income attributable to common shareholders $ 1,427 $ 1,091 $ 1,043 $ 967 $ 812 GAAP ear
Slide 4: GAAP and Core Results - Quarterly
GAAP and Core Results - Quarterly ($ millions except per share data) 4Q 18 3Q 18 2Q 18 1Q 18 4Q 17 GAAP net income attributable to common shareholders ("NIAC") $ 290 $ 374 $ 349 $ 250 $ 181 Core net income attributable to common shareholders (1)(2) $ 382 $ 386 $ 358 $ 300 $ 310 GAAP earnings per com
Slide 5: 2018 Highlights
2018 Highlights Solid business fundamentals underpinning strong earnings growth P 2018 Adjusted EPS of $3.34 (+39% YoY) | Core ROTCE of 12.3% (+256 bps YoY) (1) (1) ▪ Adjusted Total Net Revenue(1) of $6.0 billion, up $175 million YoY P Auto optimization reflected in improved risk-adjusted returns ▪
Slide 6: 2018 Full-Year Financial Performance
2018 Full-Year Financial Performance 2018 Revised Outlook 2018 Actuals Adjusted EPS(1) Growth 35 – 40% 39% P Core ROTCE(1) 12% + 12.3% P P Net Financing Revenue Up 3 - 6% Up 4.3% (excluding Core OID)(1) Other Revenue (excluding change in fair value of equity securities)(1) Relatively Flat Down < 1%
Slide 7: Core Metric Trends
Core Metric Trends Adjusted Earnings Per Share(1) Adjusted Total Net Revenue(2) $0.91 $0.92 ($ millio ns) $1,556 $1,521 $0.83 $1,492 $1,480 $1,463 $1,471 $1,472 $393 $392 $0.70 $0.68 $1,399 $1,383 $1,391 $379 $356 $381 $0.65 $1,353 $1,344 $1,372 $388 $394 $0.56 $0.54 $0.58 $388 $0.52 $0.52 $0.54 $35
Slide 8: Fourth Quarter and Full Year Financial Results
Fourth Quarter and Full Year Financial Results ($ millions; except per share data) 4Q 18 3Q 18 4Q 17 2018 2017 (1) Net financing revenue (excluding Core OID) $ 1,163 $ 1,129 $ 1,113 $ 4,476 $ 4,292 Core OID (23) (22) (19) (86) (71) Net financing revenue (as reported) $ 1,140 $ 1,107 $ 1,094 $ 4,390
Slide 9: Adjusted EPS and Core ROTCE
Adjusted EPS(1) and Core ROTCE(1) Sustained execution along strategic path Adjusted Earnings per Share(1) Core ROTCE(1) 19% CAGR + 445 bps $3.34 12.3% 10.0% 9.8% $2.39 9.4% $2.16 $2.00 7.9% $1.68 2014 2015 2016 2017 2018 2014 2015 2016 2017 2018 (1) Represents a non-GAAP financial measure. See page
Slide 10: Adjusted Total Net Revenue
Adjusted Total Net Revenue(1) Top line revenue growth driven by balance sheet optimization and deposit growth Adjusted Total Net Revenue(1) ($ millions) ‘14 → ‘18 $6,011 +$1.03B $5,836 $5,498 $5,262 $4,985 $4,292 $4,476 +$929M $3,964 $3,764 $3,547 $1,438 $1,498 $1,534 $1,544 $1,535 +$97M 2014 2015 2
Slide 11: Earning Asset Trends
Earning Asset Trends Diversified balance sheet – optimizing auto, growing capital efficient assets ($ billions; end of period balances) ‘14 → ‘18 $170.8B +$27.6B $156.1B $160.7B $4.7 $151.4B $4.0 $16.7 $143.2B $3.2 $2.6 $11.1 $13.7 $1.8 $9.8 $7.5 $32.3 $23.7 $25.8 $29.2 $22.3 $34.0 $34.9 $38.9 $37.1
Slide 12: Secured Balance Sheet
Secured Balance Sheet Portfolio predominately composed of prime, secured consumer and commercial loans Inc / (Dec) vs. 2017 2018 2018 2018 Avg. Balances NCO % NCO $ NCO % NCO $ ($ billions) ($ millions) ($ millions) Retail Auto $70B 1.33% $927M (0.15)% ($59)M Commercial Auto $36B 0.01% $5M 0.01% $3M
Slide 13: Noninterest Expense
Noninterest Expense Disciplined expense deployment – investing for the future ($ millions) $3,264 $3,110 $2,948 $2,939 $2,761 $955 $950 $988 $940 $879 50.8% $2,309 $2,160 $1,960 $1,882 $1,999 47.6% 45.3% 45.4% 45.8% 2014 2015 2016 2017 2018 (1) (2) (3) Noninterest expense (excld. Insurance) Insuranc
Slide 14: Balance Sheet and Net Interest Margin
Balance Sheet and Net Interest Margin ($ millions) 4Q 18 3Q 18 4Q 17 2018 2017 Average Average Average Average Average Balance Yield Balance Yield Balance Yield Balance Yield Balance Yield Retail Auto Loan $ 69,982 6.39% $ 70,547 6.20% $ 67,501 5.90% $ 69,804 6.14% $ 66,502 5.80% Auto Lease (net of
Slide 15: Deposits
Deposits • Highest quarterly growth in retail balances and new Stable, consistent growth of retail deposits retail deposit customers Deposit Levels (EOP) and Customer Retention Rate • Total deposits of $106.2 billion, up $12.9 billion YoY ($ billions) $106.2 $101.4 − Customer retention strong at 96%
Slide 16: Capital
Capital • Preliminary fully phased-in Basel III CET1 ratio of 9.1% Capital Ratios(1) and Risk-Weighted Assets − CET1 ratio down QoQ primarily driven by RWA growth from seasonally higher commercial auto balances 12.9% 12.5% 12.6% 12.7% 12.3% 11.2% 11.0% 11.1% 11.1% 10.8% • 4Q 18 share repurchases equ
Slide 17: Asset Quality
Asset Quality Consolidated Net Charge-Offs Provision Expense ($ millions) 1.01% Provision Expense 3Q 17 4Q 17 1Q 18 2Q 18 3Q 18 4Q 18 0.86% 0.85% 0.84% 0.85% 0.75% Retail Auto $ 314 $ 286 $ 253 $ 168 $ 229 $ 262 0.66% 0.57% Commercial Auto (2) 2 6 2 - 1 Mortgage Finance 4 2 2 - 2 (3) Corporate Finan
Slide 18: Auto Finance – Results
Auto Finance – Results • Auto Finance reported pre-tax income of $335 million, Increase/(Decrease) vs. up $50 million YoY and down $48 million QoQ Key Financials ($ millions) 4Q 18 3Q 18 4Q 17 Net financing revenue $ 979 $ 23 $ 40 – Net financing revenue up YoY and QoQ primarily due to Total other r
Slide 19: Auto Finance – Key Metrics
Auto Finance – Key Metrics Consumer Originations Origination Mix ($ billions; % of $ originations) (% of $ originations) $9.1 $9.5 $9.6 45% 42% $8.1 $8.1 $8.2 50% 51% 53% 52% 39% 44% 45% 40% 47% 47% 11% 14% 11% 13% 12% 10% 29% 26% 28% 28% 26% 27% 44% 44% 39% 35% 38% 36% 32% 32% 30% 27% 26% 27% 11% 1
Slide 20: Insurance
Insurance • Pre-tax loss of $13 million due to change in fair value Increase/(Decrease) vs. of equity securities Key Financials ($ millions) 4Q 18 3Q 18 4Q 17 Premiums, service revenue earned and other $ 271 $ 11 $ 16 • Core pre-tax income(1) of $78 million, down $2 million Losses and loss adjustmen
Slide 21: Corporate Finance
Corporate Finance • Pre-tax income of $21 million Increase/(Decrease) vs. Key Financials ($ millions) 4Q 18 3Q 18 4Q 17 • Core pre-tax income(1) of $25 million, down $7 million Net financing revenue $ 51 $ 1 $ 5 YoY and down $12 million QoQ Total other revenue (adjusted) (1) 6 (9) (6) Total net reve
Slide 22: Mortgage Finance
Mortgage Finance • Pre-tax income of $15 million, up $13 million YoY and Increase/(Decrease) vs. up $7 million QoQ Key Financials ($ millions) 4Q 18 3Q 18 4Q 17 Net financing revenue $ 48 $ 4 $ 14 – Higher net financing revenue YoY driven by asset Total other revenue 2 - 1 Total net revenue $ 50 $ 4
Slide 23: 2019 Full-Year Outlook
2019 Full-Year Outlook 2018 FY Results 2019 Outlook Adjusted EPS (1) $3.34 Up 7 – 10% Growth Core ROTCE (1) 12.3% 12 – 13% + Total Adjusted $6.01B Up 4 – 6% Net Revenue (1) Adjusted 47.6% Flat to Down 1% Efficiency Ratio (1) Retail Auto Low-end of 1.33% NCO % 1.4 – 1.6% Steady, Disciplined Execution
Slide 24: 2019 Strategic Priorities
2019 Strategic Priorities Ally – Do It Right. Dominant Franchises − Ongoing optimization of auto & insurance Superior Auto Finance Digital Bank Products & Leader − Sustained deposit growth & customer acquisition Services − Scale in expanded digital product offerings − Efficient capital management &
Slide 25: Supplemental Charts
Supplemental Charts
Slide 26: Results by Segment
Supplemental Results by Segment Pre-Tax Income ($ millions) 2018 2017 4Q 18 3Q 18 4Q 17 Automotive Finance $ 1,368 $ 1,220 $ 335 $ 383 $ 285 Insurance 80 168 (13) 55 80 Dealer Financial Services $ 1,448 $ 1,388 $ 322 $ 438 $ 365 Corporate Finance 144 114 21 36 32 Mortgage Finance 45 20 15 8 2 Corpor
Slide 27: Funding and Liquidity
Supplemental Funding and Liquidity • Ally Bank funded assets at 89% up 7 pts YoY Growth in Bank Funded Assets • Deposits at 66% of total funding (ex Core OID balance) ($ billions) $178.9 up 4 pts YoY $158.6 $163.7 $167.1 • $0.7 billion of new secured funding in 4Q 18 89% – $0.7 billion retail auto s
Slide 28: Corporate and Other
Supplemental Corporate and Other • Corporate and Other includes the impact of centralized Increase/(Decrease) vs. Key Financials ($ millions) 4Q 18 3Q 18 4Q 17 asset and liability management, corporate overhead Net financing revenue $ 47 $ 4 $ (13) allocation activities, the legacy mortgage portfoli
Slide 29: Interest Rate Sensitivity
Supplemental Interest Rate Sensitivity Net Financing Revenue Impacts (1): Baseline vs. Forward Curve 4Q 18 3Q 18 (2) (2) ($ millions) Gradual Instantaneous Gradual Instantaneous -100 bp $ (20) $ (34) $ (21) $ (31) +100 bp $ 51 $ 10 $ (3) $ (70) Stable rate environment n/m $ (10) n/m $ (59) (1) Net f
Slide 30: Deferred Tax Asset
Supplemental Deferred Tax Asset Deferred Tax Asset 4Q 18 3Q 18 (1) ($ millions) Gross DTA/(DTL) Valuation Net DTA/(DTL) Net DTA/(DTL) Balance Allowance Balance Balance Net Operating Loss (Federal) $ 8 $ - $ 8 $ 15 Tax Credit Carryforwards 1,796 (963) 833 1,051 State/Local Tax Carryforwards 169 (94)
Slide 31: 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, GAAP measures: Adjusted Earnings per Share (Adj
Slide 32: GAAP to Core Results – Annual
Supplemental GAAP to Core Results – Annual Adjusted Earnings per Share ("Adjusted EPS") FY 2018 FY 2017 FY 2016 FY 2015 FY 2014 Numerator ($ millions) GAAP net income attributable to common shareholders $ 1,263 $ 929 $ 1,037 $ (1,282) $ 882 Discontinued operations, net of tax - (3) 44 (392) (225) Co
Slide 33: GAAP to Core Results – Quarterly
Supplemental GAAP to Core Results – Quarterly Adjusted Earnings per Share ("Adjusted EPS") QUARTERLY TREND 4Q 18 3Q 18 2Q 18 1Q 18 4Q 17 3Q 17 2Q 17 1Q 17 4Q 16 3Q 16 2Q 16 1Q 16 4Q 15 Numerator ($ millions) GAAP net income attributable to common shareholders $ 290 $ 374 $ 349 $ 250 $ 181 $ 282 $ 25
Slide 34: GAAP to Core Results – Annual
Supplemental GAAP to Core Results – Annual Adjusted Tangible Book Value per Share ("Adjusted TBVPS") FY 2018 FY 2017 FY 2016 FY 2015 FY 2014 Numerator ($ billions) GAAP shareholder's equity $ 13.3 $ 13.5 $ 13.3 $ 13.4 $ 15.4 Preferred equity - - - (0.7) (1.3) GAAP common shareholder's equity $ 13.3
Slide 35: GAAP to Core Results – Quarterly
Supplemental GAAP to Core Results – Quarterly Adjusted Tangible Book Value per Share ("Adjusted TBVPS") QUARTERLY TREND 4Q 18 3Q 18 2Q 18 1Q 18 4Q 17 3Q 17 2Q 17 1Q 17 4Q 16 3Q 16 2Q 16 1Q 16 4Q 15 Numerator ($ billions) GAAP shareholder's equity $ 13.3 $ 13.1 $ 13.1 $ 13.1 $ 13.5 $ 13.6 $ 13.5 $ 13
Slide 36: GAAP to Core Results – Annual
Supplemental GAAP to Core Results – Annual Core Return on Tangible Common Equity ("Core ROTCE") FY 2018 FY 2017 FY 2016 FY 2015 FY 2014 Numerator ($ millions) GAAP net income attributable to common shareholders $ 1,263 $ 929 $ 1,037 $ (1,282) $ 882 Discontinued operations, net of tax - (3) 44 (392)
Slide 37: GAAP to Core Results – Quarterly
Supplemental GAAP to Core Results – Quarterly Core Return on Tangible Common Equity ("Core ROTCE") QUARTERLY TREND 4Q 18 3Q 18 2Q 18 1Q 18 4Q 17 Numerator ($ millions) GAAP net income attributable to common shareholders $ 290 $ 374 $ 349 $ 250 $ 181 Discontinued operations, net of tax (1) - (1) 2 (2
Slide 38: GAAP to Core Results – Annual
Supplemental GAAP to Core Results – Annual Adjusted Efficiency Ratio FY 2018 FY 2017 FY 2016 FY 2015 FY 2014 Numerator ($ millions) Total noninterest expense $ 3,264 $ 3,110 $ 2,939 $ 2,761 $ 2,948 Rep and warrant expense 3 0 6 13 10 Insurance expense (955) (950) (940) (879) (988) Repositioning item
Slide 39: GAAP to Core Results – Quarterly
Supplemental GAAP to Core Results – Quarterly Adjusted Efficiency Ratio QUARTERLY TREND 4Q 18 3Q 18 2Q 18 1Q 18 4Q 17 Numerator ($ millions) GAAP noninterest expense $ 804 $ 807 $ 839 $ 814 $ 769 Rep and warrant expense 1 (0) 2 0 0 Insurance expense (215) (241) (268) (231) (213) Adjusted noninterest
Slide 40: 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) 4Q 18 3Q 18 2Q 18 1Q 18 4Q 17 Numerator Common equity tier 1 capital (transition) $ 13.4 $ 13.4 $ 13.3 $ 13.1 $ 13.2 DTAs arising from NOL and tax credit carryforward
Slide 41: Notes on non-GAAP and other financial measures
Supplemental Notes on non-GAAP and other financial measures ($ millions) 4Q 18 3Q 18 4Q 17 Change in the Change in the Change in the Core OID & Core OID & Core OID & fair value of (1) fair value of (1) fair value of GAAP Repositioning Non-GAAP GAAP Repositioning Non-GAAP GAAP Repositioning Non-GAAP
Slide 42: Notes on non-GAAP and other financial measures
Supplemental Notes on non-GAAP and other financial measures ($ millions) FY 2018 FY 2017 FY 2016 Change in the Change in the Change in the Core OID & Core OID & Core OID & fair value of fair value of fair value of GAAP Repositioning Non-GAAP (1) GAAP Repositioning Non-GAAP (1) GAAP Repositioning Non
Slide 43: Notes on non-GAAP and other financial measures
Supplemental Notes on non-GAAP and other financial measures ($ millions) FY 2015 FY 2014 Change in the Change in the Core OID & Core OID & fair value of fair value of GAAP Repositioning Non-GAAP (1) GAAP Repositioning Non-GAAP (1) equity equity Items Items securities securities Consolidated Ally Net
Slide 44: Notes on non-GAAP and other financial measures
Supplemental Notes on non-GAAP and other financial measures Original issue discount amortization expense ANNUAL TREND ($ millions) FY 2018 FY 2017 FY 2016 FY 2015 FY 2014 Core original issue discount (Core OID) amortization expense (1) $ 86 $ 71 $ 57 $ 45 $ 172 Other OID 15 20 21 16 11 GAAP original
Slide 45: Notes on non-GAAP and other financial measures
Supplemental Notes on non-GAAP and other financial measures Net Financing Revenue (ex. Core OID) ($ millions) FY 2018 FY 2017 FY 2016 FY 2015 FY 2014 GAAP Net Financing Revenue $ 4,390 $ 4,221 $ 3,907 $ 3,719 $ 3,375 Core OID 86 71 57 45 172 Net Financing Revenue (ex. Core OID) [a] $ 4,476 $ 4,292 $