Ally Financial Inc. · NYSE:ALLY
Ally Financial — Q3 2019 Earnings Presentation
31 slides from Ally Financial's earnings presentation, Oct 16, 2019
Slide 1: Ally Financial Inc. 3Q 2019 Earnings Review
Ally Financial Inc. 3Q 2019 Earnings Review October 16, 2019 3Q 2019 Preliminary Results Contact Ally Investor Relations at (866) 710-4623 or investor.relations@ally.com 1
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
GAAP and Core Results ($ millions except per share data) 3Q 19 2Q 19 1Q 19 4Q 18 3Q 18 GAAP net income attributable to common shareholders ("NIAC") $ 381 $ 582 $ 374 $ 290 $ 374 (1)(2) Core net income attributable to common shareholders $ 396 $ 387 $ 325 $ 382 $ 386 GAAP earnings per common share ("
Slide 4: Third Quarter 2019 Highlights
Third Quarter 2019 Highlights Steady Execution, Delivering on Long-term Strategic Objectives > Adjusted EPS(1) of 1.01 cents – up 11% YoY – highest since IPO | Core ROTCE(1) of 12.3% ▪ Adjusted total net revenue(1) of $1.62 billion – up 7% YoY > Sustained optimization of auto business – originations
Slide 5: Core Metric Trends
Core Metric Trends Adjusted Earnings Per Share(1) Adjusted Total Net Revenue(2) $1.01 ($ millio ns) $0.97 $1,620 $0.91 $0.92 $1,556 $1,557 $1,521 $1,535 $0.83 $0.80 $1,492 $424 $1,472 $1,480 $1,463 $1,471 $393 $393 $396 $0.70 $0.68 $1,399 $1,383 $1,391 $379 $392 $0.65 $388 $381 $356 $394 $0.56 $0.54
Slide 6: Third Quarter 2019 Financial Results
Third Quarter 2019 Financial Results ($ millions; except per share data) Increase / (Decrease) vs. 3Q 19 2Q 19 3Q 18 2Q 19 3Q 18 Net financing revenue (excluding Core OID) (1) $ 1,195 $ 1,164 $ 1,129 $ 31 $ 67 Core OID (7) (7) (22) (0) 14 Net financing revenue (as reported) $ 1,188 $ 1,157 $ 1,107 $
Slide 7: Balance Sheet and Net Interest Margin
Balance Sheet and Net Interest Margin ($ millions) 3Q 19 2Q 19 3Q 18 Average Average Average Balance Yield Balance Yield Balance Yield Retail Auto Loan $ 73,162 6.66% $ 72,274 6.58% $ 70,547 6.20% Auto Lease (net of depreciation) 8,525 6.24% 8,370 5.94% 8,634 5.56% Commercial Auto 33,273 4.59% 34,75
Slide 8: Deposits
Deposits • Total deposits of $119.2 billion, up $17.9 billion or 18% YoY Retail Deposit Balance Growth – 39 consecutive quarters of YoY double-digit percentage Deposit Levels (EOP) and Customer Retention Rate ($ billions) growth in balances $116.3 $119.2 $113.3 $106.2 – Customer retention of 96% - s
Slide 9: Stable Deposit Vintages
Stable Deposit Vintages > All retail deposit vintages stable or growing since launch of Ally Bank Ally Retail Deposit Balances by Vintage ($ millions) $100,000 $90,000 $80,000 $70,000 $60,000 $50,000 $40,000 $30,000 $20,000 $10,000 $0 Pre-2009 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 >
Slide 10: Capital
Capital • Preliminary fully phased-in Basel III CET1 ratio of 9.6% Capital Ratios(1) and Risk-Weighted Assets – Prudent capital-efficient asset growth 12.7% 12.5% 12.7% 12.8% 12.3% 11.2% • Repurchased 9.3M shares in 3Q 19, over an aggregate 11.1% 10.8% 11.0% 11.2% 9.4% 9.3% 9.5% 9.6% 20% of shares r
Slide 11: Asset Quality
Asset Quality Consolidated Net Charge-Offs Provision Expense ($ millions) Provision Expense 3Q 18 4Q 18 1Q 19 2Q 19 3Q 19 1.01% 0.84% 0.85% 0.83% Retail Auto $ 229 $ 261 $ 257 $ 180 $ 264 0.75% 0.73% Commercial Auto - 1 5 - 1 0.57% 0.56% Mortgage Finance 2 (3) 2 - - Corporate Finance 8 10 23 3 3 175
Slide 12: Auto Finance – Results
Auto Finance – Results • Pre-tax income of $429 million, up $46 million YoY Increase/(Decrease) vs. and down $30 million QoQ Key Financials ($ millions) 3Q 19 2Q 19 3Q 18 Net financing revenue $ 1,078 $ 56 $ 122 – Net financing revenue increased QoQ and YoY due to Total other revenue 59 (2) (21) Tot
Slide 13: Auto Finance – Key Metrics
Auto Finance – Key Metrics Consumer Originations Origination Mix ($ billions; % of $ originations) (% of $ originations) 688 688 692 688 685 688 $9.6 $9.2 $9.7 $9.3 51% 53% 52% 56% 54% 50% $8.1 $8.2 45% 50% 46% 49% 47% 47% 13% 12% 10% 11% 14% 10% 28% 26% 25% 25% 28% 36% 35% 38% 35% 36% 27% 34% 11% 1
Slide 14: Insurance
Insurance • Pre-tax income of $56 million, up $1 million YoY and Increase/(Decrease) vs. up $56 million QoQ Key Financials ($ millions) 3Q 19 2Q 19 3Q 18 • Core pre-tax income(1) of $66 million, up $17 million Premiums, service revenue earned and other $ 283 $ 20 $ 23 YoY and up $70 million QoQ Loss
Slide 15: Corporate Finance
Corporate Finance • Pre-tax income of $44 million Increase/(Decrease) vs. • Core pre-tax income(1) of $45 million, up $9 million Key Financials ($ millions) 3Q 19 2Q 19 3Q 18 YoY and down $2 million QoQ Net financing revenue (1) $ 60 $ (1) $ 10 Total other revenue (adjusted) 10 (1) (4) Total net rev
Slide 16: Mortgage Finance
Mortgage Finance • Pre-tax income of $11 million Increase/(Decrease) vs. Key Financials ($ millions) 3Q 19 2Q 19 3Q 18 – Net financing revenue down YoY and QoQ driven by Net financing revenue $ 39 $ (7) $ (5) faster prepayments, higher premium amortization Total other revenue 10 6 8 Total net revenu
Slide 17: Conclusion
Conclusion Steady Execution Along Our Strategic Path > Ongoing optimization of auto & insurance Dominant Franchises Leading Leading Auto Finance & > Sustained deposit growth & customer acquisition Digital Insurance Bank Partner > Scale in expanded product offerings > Efficient capital management & d
Slide 18: Supplemental
Supplemental 18 3Q 2019 Preliminary Results
Slide 19: Results by Segment
Supplemental Results by Segment Pre-Tax Income Increase/(Decrease) vs. ($ millions) 3Q 19 2Q 19 3Q 18 2Q 19 3Q 18 Automotive Finance $ 429 $ 459 $ 383 $ (30) $ 46 Insurance 56 - 55 56 1 Dealer Financial Services $ 485 $ 459 $ 438 $ 26 $ 47 Corporate Finance 44 46 36 (2) 8 Mortgage Finance 11 14 8 (3
Slide 20: Funding and Liquidity
Supplemental Funding and Liquidity • Ally Bank funded assets at 92% up 5 pts YoY Growth in Bank Funded Assets • Deposits at 74% of total funding (excluding Core ($ billions) $181.5 OID balance)(a) up 9 pts YoY $155.9 $157.4 $164.0 $173.1 • Wholesale funding in 3Q: 92% 87% – $0.8 billion of new retai
Slide 21: Corporate and Other
Supplemental Corporate and Other • Corporate and Other includes the impact of Increase/(Decrease) vs. centralized asset and liability management, Key Financials ($ millions) 3Q 19 2Q 19 3Q 18 corporate overhead allocation activities, the Net financing (loss) $ (3) $ (16) $ (46) Total other revenue 4
Slide 22: Interest Rate Sensitivity
Supplemental Interest Rate Sensitivity (1) Net Financing Revenue Impacts : Baseline vs. Forward Curve 3Q 19 2Q 19 (2) (2) ($ millions) Gradual Instantaneous Gradual Instantaneous -100 bp $ (20) $ (29) $ (60) $ (147) +100 bp $ 17 $ 22 $ 43 $ 28 Stable rate environment n/m $ (91) n/m $ (60) (1) Net fi
Slide 23: Deferred Tax Asset
Supplemental Deferred Tax Asset (1) (1) Deferred Tax Asset 3Q 19 2Q 19 ($ millions) Gross DTA/(DTL) Valuation Net DTA/(DTL) Net DTA/(DTL) Balance Allowance Balance Balance Net Operating Loss (Federal) $ 8 $ - $ 8 $ 8 Tax Credit Carryforwards 1,670 (752) 918 714 State/Local Tax Carryforwards 161 (98)
Slide 24: 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 25: GAAP to Core Results – Adjusted Earnings per Share
Supplemental GAAP to Core Results – Adjusted Earnings per Share Adjusted Earnings per Share ("Adjusted EPS") QUARTERLY TREND 3Q 19 2Q 19 1Q 19 4Q 18 3Q 18 2Q 18 1Q 18 4Q 17 3Q 17 2Q 17 1Q 17 4Q 16 3Q 16 Numerator ($ millions) GAAP net income attributable to common shareholders $ 381 $ 582 $ 374 $ 29
Slide 26: GAAP to Core Results – Adjusted TBVPS
Supplemental GAAP to Core Results – Adjusted TBVPS Adjusted Tangible Book Value per Share ("Adjusted TBVPS") QUARTERLY TREND 3Q 19 2Q 19 1Q 19 4Q 18 3Q 18 2Q 18 1Q 18 4Q 17 3Q 17 2Q 17 1Q 17 4Q 16 3Q 16 Numerator ($ billions) GAAP common shareholder's equity $ 14.5 $ 14.3 $ 13.7 $ 13.3 $ 13.1 $ 13.1
Slide 27: GAAP to Core Results – Core ROTCE
Supplemental GAAP to Core Results – Core ROTCE Core Return on Tangible Common Equity ("Core ROTCE") QUARTERLY TREND 3Q 19 2Q 19 1Q 19 4Q 18 3Q 18 Numerator ($ millions) GAAP net income attributable to common shareholders $ 381 $ 582 $ 374 $ 290 $ 374 Discontinued operations, net of tax - 2 1 (1) - C
Slide 28: GAAP to Core Results – Adjusted Efficiency Ratio
Supplemental GAAP to Core Results – Adjusted Efficiency Ratio Adjusted Efficiency Ratio QUARTERLY TREND 3Q 19 2Q 19 1Q 19 4Q 18 3Q 18 Numerator ($ millions) GAAP noninterest expense $ 838 $ 881 $ 830 $ 804 $ 807 Rep and warrant expense (0) (0) - 1 (0) Insurance expense (247) (301) (227) (215) (241)
Slide 29: 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) 3Q 19 2Q 19 1Q 19 4Q 18 3Q 18 Numerator Common equity tier 1 capital $ 14.0 $ 13.9 $ 13.6 $ 13.4 $ 13.4 Denominator Risk-weighted assets (transition) $ 145.8 $ 145.9
Slide 30: Notes on Non-GAAP and Other Financial Measures
Supplemental Notes on Non-GAAP and Other Financial Measures ($ millions) 3Q 19 2Q 19 3Q 18 Change in the Change in the Change in the fair value of fair value of fair value of GAAP Core OID Non-GAAP (1) GAAP Core OID Non-GAAP (1) GAAP Core OID Non-GAAP (1) equity equity equity securities securities s
Slide 31: Notes on Non-GAAP and Other Financial Measures
Supplemental Notes on Non-GAAP and Other Financial Measures Net Financing Revenue (ex. Core OID) QUARTERLY TREND ($ millions) 3Q 19 2Q 19 1Q 19 4Q 18 3Q 18 2Q 18 1Q 18 4Q 17 3Q 17 2Q 17 1Q 17 4Q 16 3Q 16 GAAP Net Financing Revenue $ 1,188 $ 1,157 $ 1,132 $ 1,140 $ 1,107 $ 1,094 $ 1,049 $ 1,094 $ 1,0