Ally Financial Inc. · NYSE:ALLY
Ally Financial — Q2 2021 Earnings Presentation
37 slides from Ally Financial's earnings presentation, Nov 25, 2021
Slide 1: Ally Financial Inc. 2Q 2021 Earnings Review
2Q 2021 Preliminary Results Ally Financial Inc. 2Q 2021 Earnings Review July 20, 2021 Contact Ally Investor Relations at (866) 710-4623 or investor.relations@ally.com 1
Slide 2: Forward-Looking Statements and Additional Information
2Q 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 and Core Results: Quarterly
2Q 2021 Preliminary Results GAAP and Core Results: Quarterly ($ millions except per share data) 2Q 21 1Q 21 4Q 20 3Q 20 2Q 20 GAAP net income attributable to common shareholders (NIAC) $ 900 $ 796 $ 687 $ 476 $ 241 Core net income attributable to common shareholders (1)(2) $ 868 $ 790 $ 606 $ 473 $
Slide 4: Ally's Culture and Priorities
2Q 2021 Preliminary Results Ally’s Culture and Priorities do it right customers. culture & values Relentless focus on dealers, consumers & commercial clients employees. Continuous prioritization of the well-being of our teammates Driving long-term, enhanced value for communities. ALL stakeholders Dr
Slide 5: 2Q 2021 Highlights
2Q 2021 Preliminary Results 2Q 2021 Highlights Focused Execution | Delivering Results $2.33 26.7% $2.14B 11.3% Adjusted Core Adjusted Total CET1 EPS(1) ROTCE(1) Net Revenue(1) Capital Ratio ▪ Increased FY 2021 buyback authorization by 25% to $2.0B | Announced 3Q dividend of $0.25, up 32% from PQ ▪ $
Slide 6: Quarterly Core Metric Trends
2Q 2021 Preliminary Results Quarterly Core Metric Trends Adjusted Earnings Per Share & Core ROTCE Adjusted Total Net Revenue & Core PPNR (3) (3) (1) (2) ($ billio ns) Adj. To tal Net Revenue Core Pre-tax, Pre -Provision Ne t Reve nue (PPNR) Adj. EPS Core ROTCE $2.33 $2.09 $2.14 $1.88 $1.93 $1.60 $1.
Slide 7: Financial Results
2Q 2021 Preliminary Results 2Q 2021 Financial Results Inc / (Dec) v. ($ millions; except per share data) 2Q 21 1Q 21 2Q 20 1Q 21 2Q 20 (1) $ 1,556 $ 1,382 $ 1,063 $ 175 $ 494 Net financing revenue (ex. Core OID) (1) (9) (10) (9) 0 (1) Core OID Net financing revenue $ 1,547 $ 1,372 $ 1,054 $ 175 $ 49
Slide 8: Balance Sheet and Net Interest Margin
2Q 2021 Preliminary Results Balance Sheet and Net Interest Margin ($ millions) 2Q 21 1Q 21 2Q 20 Average Average Average Balance Yield Balance Yield Balance Yield Retail Auto Loan $ 74,662 6.70% $ 73,500 6.66% $ 72,262 6.48% Retail Auto Loan (ex. hedge impact) 6.92% 6.90% 6.77% Auto Lease (net of de
Slide 9: Capital Ratios and Shareholder Distributions
2Q 2021 Preliminary Results Capital Ratios and Shareholder Distributions • 2Q 2021 CET1 ratio of 11.3% Capital Ratios and Risk-Weighted Assets • Ally’s Board of Directors approved 3Q 2021 common ($ billions) dividend per share of $0.25 and an increase to the 2021 13.8% 14.1% 14.1% 14.6% 14.8% common
Slide 10: Asset Quality: Key Metrics
2Q 2021 Preliminary Results Asset Quality: Key Metrics Consolidated Net Charge-Offs (NCOs) Net Charge-Off Activity Allowance as % of Annualized NCOs Annualized NCO Rate ($ millions) 900% 0.98% 850% 0.91% Net Charge-Offs 1Q 20 2Q 20 3Q 20 4Q 20 1Q 21 2Q 21 800% 0.88% 750% 0.83% 0.84% 0.78% Retail Aut
Slide 11: Asset Quality: Coverage and Reserves
2Q 2021 Preliminary Results Asset Quality: Coverage and Reserves Consolidated Coverage Ratio Retail Auto Coverage Ratio ($ billions) Reserve - $ Reserve - % ($ billions) Reserve - $ Reserve - % 2.85% 2.87% 2.78% 2.79% 2.79% 4.09% 4.06% 3.95% 2.54% 3.91% 3.80% 2.03% 3.70% 3.34% 0.99% $2.8 $3.0 $3.0 $
Slide 12: Ally Bank: Deposit & Customer Trends
2Q 2021 Preliminary Results Ally Bank: Deposit & Customer Trends • Total Deposits of $139 billion grew 6% YoY Total Deposits: Retail & Brokered Balances – Retail deposits of $129.2 billion, up $0.9 billion QoQ despite a 70% ($ billions, EoP) Retail Brokered / Other Customer Retention Rate increase Y
Slide 13: Ally Bank: Leading, Growing, All-Digital Disruptor
2Q 2021 Preliminary Results Ally Bank: Leading, Growing, All-Digital Disruptor #1 $129B 12+ 49 Largest All-Digital, Retail Deposit Consecutive Years of Consecutive Quarters Direct U.S. Bank(1) Balances Retail Deposit Growth of Customer Growth Ally Bank Customers Ally Invest Retail Depositors: Consis
Slide 14: Auto Finance
2Q 2021 Preliminary Results Auto Finance Inc / (Dec) v. • Pre-tax income of $917 million, up $588 million YoY Key Financials ($ millions) 2Q 21 1Q 21 2Q 20 and up $114 million QoQ Net financing revenue $ 1,333 $ 127 $ 344 Total other revenue 61 (1) 21 – Net financing revenue reflects growth in retai
Slide 15: Auto Finance: Agile Market Leader
2Q 2021 Preliminary Results Auto Finance: Agile Market Leader #1 #1 #1 Top-3 Leading Prime Auto Bank Floorplan Bank Retail Auto Used Auto Insurance Provider Lender(1) Lender(2) Loan Outstandings(3) Lender(4) (F&I, P&C Products) Dealer Relationships & Consumer Applications Auto Balance Sheet Trends (
Slide 16: Insurance
2Q 2021 Preliminary Results Insurance Inc / (Dec) v. • Pre-tax income of $87 million, down $41 million YoY and Key Financials ($ millions) 2Q 21 1Q 21 2Q 20 down $54 million QoQ due to change in fair value of equity securities YoY and elevated realized gains in prior quarter Premiums, service revenu
Slide 17: Corporate Finance
2Q 2021 Preliminary Results Corporate Finance Inc / (Dec) v. • Pre-tax income of $95 million, up $63 million YoY and up Key Financials ($ millions) 2Q 21 1Q 21 2Q 20 $42 million QoQ Net financing revenue $ 77 $ 6 $ - (1) Adjusted total other revenue 34 13 29 – Higher total revenues reflecting strong
Slide 18: Mortgage Finance
2Q 2021 Preliminary Results Mortgage Finance Inc / (Dec) v. • Pre-tax income breakeven for the quarter, down $8 million YoY and down $23 million QoQ Key Financials ($ millions) 2Q 21 1Q 21 2Q 20 Net financing revenue $ 23 $ - $ (7) Total other revenue 22 (18) 3 – Net financing revenues trends reflec
Slide 19: Financial Outlook
2Q 2021 Preliminary Results Financial Outlook Enhanced franchise value | Structurally more profitable company Core ROTCE Progression (1) 1H’21 Reserve Reduction +/ - 20% 20% Enhanced, Sustainable Return & Growth Profile 15%+ 15%+ ✓ Annual expansion of PPNR and Operating Leverage 12.3% 12.3% 12.0% 12
Slide 20: Strategic Priorities
2Q 2021 Preliminary Results Strategic Priorities ‘Do It Right’ Culture | Relentless Customer Focus Leading, adaptable Auto and Insurance and Consumer & digitally-based Ally Bank platforms Commercial Lender Ongoing customer growth and relationship Savings & deepening across scalable platforms Insuran
Slide 21: Supplemental
2Q 2021 Preliminary Results Supplemental 21
Slide 22: Results by Segment
Supplemental 2Q 2021 Preliminary Results Results by Segment Core pre-tax income Walk Inc / (Dec) v. Segment Detail ($ millions) 2Q 21 1Q 21 2Q 20 1Q 21 2Q 20 Automotive Finance $ 917 $ 803 $ 329 $ 114 $ 588 Insurance 87 141 128 (54) (41) Dealer Financial Services $ 1,004 $ 944 $ 457 $ 60 $ 547 Corpo
Slide 23: Funding Profile Details
Supplemental 2Q 2021 Preliminary Results Funding Profile Details Funding Mix Deposit Mix & Retail Portfolio Rate Brokered / Other Retail CD MMA/OSA/Checking Deposits Secured Debt FHLB / Other Unsecured Debt 3.00% 10% 7% 7% 6% 4% 13% 9% 1% 2.50% 14% 4% 53% 9% 56% 58% 62% 11% 65% 2.00% 1.50% 80% 89% 6
Slide 24: Corporate and Other
Supplemental 2Q 2021 Preliminary Results Corporate and Other Inc / (Dec) v. • Corporate and Other activity reflects: Key Financials ($ millions) 2Q 21 1Q 21 2Q 20 Net financing revenue $ 99 $ 42 $ 153 – Centralized asset and liability management Total other revenue 78 20 26 Total net revenue $ 177 $
Slide 25: Interest Rate Risk Sensitivities
Supplemental 2Q 2021 Preliminary Results Interest Rate Risk Sensitivities Net Financing Revenue Sensitivity Analysis (1) 2Q 21 1Q 21 Change in interest rates Gradual (2) Instantaneous Gradual (2) Instantaneous -25 bps (3) $ (43) $ (96) $ (44) $ (96) +100 bps $ (71) $ (70) $ (27) $ (9) Stable rate en
Slide 26: Deferred Tax Asset
Supplemental 2Q 2021 Preliminary Results Deferred Tax Asset Deferred Tax Asset 2Q 21(1) 1Q 21(1) ($ millions) Gross DTA Valuation Net DTA Net DTA Balance Allowance Balance Balance Net Operating Loss (Federal) $ 8 $ - $ 8 $ 7 Tax Credit Carryforwards 979 (713) 266 254 State/Local Tax Carryforwards 22
Slide 27: Notes on Non-GAAP Financial Measures
Supplemental 2Q 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 28: Notes on Other Financial Measures
Supplemental 2Q 2021 Preliminary Results Notes on Other Financial Measures 8) 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 29: Additional Notes
Supplemental 2Q 2021 Preliminary Results Additional Notes Page – 13 | Ally Bank: Leading, Growing, All-Digital Disruptor (1) Source: FDIC, FFIEC Call Reports and Company filings of branchless banks including Marcus, Discover, American Express, Synchrony. Page – 14 | Auto Finance (1) Interest expense
Slide 30: Additional Notes
Supplemental 2Q 2021 Preliminary Results Additional Notes Page – 22 | Results by Segment (2) Change in fair value of equity securities impacts the Insurance, Corporate Finance and Corp/Other segments. Reflects equity fair value adjustments related to ASU 2016-01 which requires change in the fair val
Slide 31: GAAP to Core Results: Adjusted EPS - Quarterly
Supplemental 2Q 2021 Preliminary Results GAAP to Core Results: Adjusted EPS - Quarterly Adjusted Earnings per Share ("Adjusted EPS") QUARTERLY TREND 2Q 21 1Q 21 4Q 20 3Q 20 2Q 20 1Q 20 4Q 19 3Q 19 2Q 19 1Q 19 4Q 18 3Q 18 2Q 18 Numerator ($ millions) GAAP net income attributable to common shareholder
Slide 32: GAAP to Core Results: Adjusted TBVPS - Quarterly
Supplemental 2Q 2021 Preliminary Results GAAP to Core Results: Adjusted TBVPS - Quarterly Adjusted Tangible Book Value per Share ("Adjusted TBVPS") QUARTERLY TREND 2Q 21 1Q 21 4Q 20 3Q 20 2Q 20 1Q 20 4Q 19 3Q 19 2Q 19 1Q 19 4Q 18 3Q 18 2Q 18 Numerator ($ billions) GAAP common shareholder's equity $
Slide 33: GAAP to Core Results: Core ROTCE - Quarterly
Supplemental 2Q 2021 Preliminary Results GAAP to Core Results: Core ROTCE - Quarterly Core Return on Tangible Common Equity ("Core ROTCE") QUARTERLY TREND 2Q 21 1Q 21 4Q 20 3Q 20 2Q 20 1Q 20 4Q 19 3Q 19 2Q 19 1Q 19 4Q 18 3Q 18 2Q 18 Numerator ($ millions) GAAP net income attributable to common share
Slide 34: GAAP to Core Results: Core ROTCE - Annual
Supplemental 2Q 2021 Preliminary Results GAAP to Core Results: Core ROTCE - Annual Core Return on Tangible Common Equity ("Core ROTCE") FY 2020 FY 2019 FY 2018 FY 2017 FY 2016 FY 2015 FY 2014 Numerator ($ millions) GAAP net income attributable to common shareholders $ 1,085 $ 1,715 $ 1,263 $ 929 $ 1
Slide 35: GAAP to Core Results: Adjusted Efficiency Ratio - Quarterly
Supplemental 2Q 2021 Preliminary Results GAAP to Core Results: Adjusted Efficiency Ratio - Quarterly Adjusted Efficiency Ratio QUARTERLY TREND 2Q 21 1Q 21 4Q 20 3Q 20 2Q 20 Numerator ($ millions) GAAP noninterest expense $ 1,075 $ 943 $ 1,023 $ 905 $ 985 Rep and warrant expense - - (0) - - Insurance
Slide 36: Non-GAAP Reconciliation – Core Income
Supplemental 2Q 2021 Preliminary Results Non-GAAP Reconciliation – Core Income ($ millions) 2Q 21 1Q 21 2Q 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 of equity R
Slide 37: Non-GAAP Reconciliations
Supplemental 2Q 2021 Preliminary Results Non-GAAP Reconciliations Net Financing Revenue (ex. Core OID) QUARTERLY TREND ($ millions) 2Q 21 1Q 21 4Q 20 3Q 20 2Q 20 1Q 20 4Q 19 3Q 19 2Q 19 1Q 19 4Q 18 3Q 18 2Q 18 GAAP Net Financing Revenue [x] $ 1,547 $ 1,372 $ 1,303 $ 1,200 $ 1,054 $ 1,146 $ 1,156 $ 1