Ally Financial Inc. · NYSE:ALLY
Ally Financial — Gmac — Debt Investor Presentation (August 2007)
40 slides from Ally Financial's debt investor presentation, Aug 9, 2007
Slide 1: Fixed Income Investor Presentation
Fixed Income Investor Presentation August 9, 2007 Sanjiv Khattri Executive Vice President & Chief Financial Officer Contact GMAC Investor Relations at (866) 710-4623 or investor.relations@gmacfs.com
Slide 2: Forward Looking Statements
Forward Looking Statements In the presentation that follows and related comments by GMAC LLC ("GMAC") management, the use of the words "expect," "anticipate," "estimate," "forecast," "initiative," "objective," "plan," "goal," "project," "outlook," "priorities," "target," "intend," "evaluate," "pursu
Slide 3: Overview
Overview GMAC Q2 2007 Performance Summary Funding Strategic Initiatives Summary Supplemental Charts Q&A
Slide 4: 2007 Second Quarter Performance Highlights
2007 - Second Quarter Performance Highlights Q2 2007 net income of $293 million, vs. earnings of $787 million in Q2 2006 Earnings improvement of $598 million from Q1 2007 Excluding ResCap, Q2 net income doubled year-over-year Results at ResCap improved despite continuing pressure in the U.S. residen
Slide 5: Second Quarter Net Income
Second Quarter Net Income * Includes Commercial Finance operating segment and 21% ownership of our former commercial mortgage unit ** Q2 2006 includes $259 million gain, net of taxes, from sale of an equity interest in a regional homebuilder 4
Slide 6: Second Quarter Pre-tax Income
Second Quarter Pre-tax Income Note: A number of GMAC's U.S. entities converted to limited liability companies (LLC) in conjunction with the transaction to sell a controlling interest in the company last year; LLC entities now pass-throughs for tax purposes 5 * Includes Commercial Finance operating s
Slide 7: ResCap - Q2 2007 Key Metrics
US mortgage market remains volatile and credit has weakened as expected Actions taken to reduce nonprime exposure and limit nonprime production helped performance Nonprime warehouse exposure greatly reduced Business lending remains stable despite continued pressure in sector Credit remains manageabl
Slide 8: ResCap - Nonprime Risk
Warehouse Lending Receivables Total: $3.9B ResCap - Nonprime Risk Reduced nonprime exposure: Held for Sale portfolio decreased through sales and lower production Steady asset run-off in the Held for Investment portfolio Successful loan restructuring / sales in the warehouse lending business Loan Ser
Slide 9: ResCap - U.S. HFS Portfolio
During the second quarter, ResCap originated $27.2 billion Originated $0.7 billion of nonprime product compared to $6.1 billion in Q2 2006 Total Q2 2007 sales were $25.8 billion U.S. nonprime HFS is $1.9 billion, a decrease of $1.2 billion from $3.1 billion at Q1 ResCap - U.S. HFS Portfolio Q2 2007
Slide 10: ResCap - U.S. HFI Portfolio
Prime Nonconforming ResCap - U.S. HFI Portfolio U.S. HFI Nonprime Portfolio by Vintage at 6/30/07($41.9B) U.S. HFI Portfolio by Product at 6/30/07 ($59.6B)* Prime Conforming Prime Second Lien Nonprime U.S. HFI portfolio declined by $2.4 billion during Q2 Nonprime decreased $3.1 billion to $41.9 bill
Slide 11: ResCap - Warehouse Lending & Servicing
ResCap - Warehouse Lending & Servicing Warehouse Receivables: Warehouse Lending Receivables declined to $3.9 billion Nonprime exposure only $0.3 billion, or 8% of Warehouse Lending Receivables Nonprime exposure decreased by approximately $0.7 billion or 70% from approximately $1.0 billion at 3/31/07
Slide 12: ResCap - Business Lending & International
ResCap - Business Lending & International 11 Business Lending Business remains profitable even as weakness in the U.S. housing market continues to pose significant challenges to the homebuilding industry Lending in healthcare and resort finance helped to offset weaknesses within residential construc
Slide 13: ResCap - Held for Investment Portfolio Credit Quality
Asset quality weaker due to continuing slow housing market and stress in nonprime mortgage market Nonprime assets continue to drive increase in delinquencies and nonaccruals On the securitized domestic HFI portfolio, ResCap's net exposure limited to $1.0 billion first loss position at 6/30/07 Charge
Slide 14: ResCap - Lending Receivables Credit Quality
2005 Warehouse lending customers began experiencing severe stress during Q4 2006 and continued into the Q2 2007 The significant decrease in nonaccrual loans was due to loan restructurings and charge-offs Construction lending has added $15 million to nonaccrual status during the second quarter as a r
Slide 15: ResCap - Recent Changes in U.S. Underwriting and Servicing
ResCap - Recent Changes in U.S. Underwriting and Servicing Tightened underwriting standards for consumer loans in a number of areas Nonprime and Alt-A mortgages Second liens and home equity loans Refocused warehouse lending strategy Targeting relationship-oriented clients Stricter adherence to margi
Slide 16: ResCap - Liquidity
ResCap - Liquidity Cash and cash equivalents of $3.7 billion at the end of Q2 2007 Issued $4 billion of unsecured debt in the second quarter Ended Q2 with $7.5 billion in equity Includes $0.5 billion capital contribution made by GMAC in April, for a total of $1.0 billion contributed by GMAC to date
Slide 17: ResCap - 2007 Outlook
ResCap - 2007 Outlook Q2 results, while still weak, showed a marked improvement compared to Q1 results despite challenging conditions in the U.S. mortgage market Multiple actions taken to mitigate risk have begun to show results Business lending operations stable despite certain credit concerns Inte
Slide 18: Auto Finance - Q2 2007 Key Metrics
New and used originations up over year-ago levels, with used originations increasing roughly 50% Auto Finance - Q2 2007 Key Metrics Originations Credit Losses Lease Residuals Margins Credit performance remains near historically low levels Residual performance remains strong compared to 2006 levels I
Slide 19: Auto Finance - Consumer Originations
Auto Finance - Consumer Originations ($ billions) Total Units (in 000s) 603 627 817 528 624 674 Q2 2007 new vehicle originations rose versus Q2 2006 levels Increased used vehicle originations by roughly 50% Posted modest growth in new vehicle originations Enrolled 2,400 diversified dealers year to d
Slide 20: Auto Finance - Consumer Credit Quality
Auto Finance - Consumer Credit Quality Losses remain near historically low levels and down from previous year Annualized credit losses as a % of average managed retail contracts Delinquencies as a % of serviced retail assets 30 days or more past due Delinquencies mostly flat year over year and compa
Slide 21: Auto Finance - Nonprime
Auto Finance - Nonprime Nonprime auto market has not experienced the pressures affecting the nonprime mortgage industry Historically, leading indicators for deterioration in nonprime auto credit performance have been rising interest rates or rising unemployment - neither one a factor to date GMAC's
Slide 22: Insurance - Q2 2007 Key Metrics
Insurance - Q2 2007 Key Metrics Written Revenue* Underwriting Results Investment Income * Includes Written Premium Continued growth in international markets offset by decline in the competitive U.S. insurance market Strong underwriting results driven by higher earned premiums and lower loss experien
Slide 23: Insurance - Consolidated Earnings
Insurance - Consolidated Earnings Core earnings continue to show growth, driven in part by favorable loss experience on vehicle service contracts and dealer inventory insurance Core Earnings = Underwriting income + Investment income (net of tax) Amounts net of taxes, pre-tax capital gains were $1 fo
Slide 24: Funding
2. Funding GMAC FINANCIAL SERVICES
Slide 25: GMAC and ResCap Maintain Strong Liquidity Position
GMAC and ResCap maintain strong liquidity position Cash and certain marketable securities of $17.5 billion at 6/30/07, up from 3/31/07 levels as a result of significant capital markets activity in the quarter $4.5 billion of unsecured transactions for GMAC, and $4.0 billion for ResCap $13.1 billion
Slide 26: Global Debt Maturities
Global Debt Maturities Staggered maturity profile minimizes refinancing risks Significant debt outstanding beyond 5 years provides flexibility Scheduled Maturity Of Long-Term Debt At 12/31/2006 Unsecured Secured $13.6 $12.4 $6.4 $2.1 $1.6 $55.2 $28.1 $22.8 $16.6 $11.1 $7.9 $13.3 $27.9 $16.7 2006 200
Slide 27: Diversified U.S. Auto Term Funding
1st Qtr 2nd Qtr 3rd Qtr 4th Qtr East 0.47 0.03 0.06 0.44 West 30.6 38.6 34.6 31.6 North 45.9 46.9 45 43.9 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr East 0.25 0 0.1 0.63 West 30.6 38.6 34.6 31.6 North 45.9 46.9 45 43.9 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr East 0.14 0.21 0 0.65 West 30.6 38.6 34.6 31.6 North 45.9 46
Slide 28: 2007 Funding Plan
2007 Funding Plan Maintain appropriate liquidity cushion Significant cash balances and committed liquidity facilities Extensive auto loan assets that can be monetized quickly ("dry powder") Laddering of debt with moderate near-term maturities Reduce all-in cost of borrowings Active liability managem
Slide 29: Strategic Initiatives
3. Strategic Initiatives GMAC FINANCIAL SERVICES
Slide 30: New GMAC
New GMAC With the closing of the GMAC sale transaction, GMAC has emerged as an independent company with an improved credit profile Strengthened capital position De-linkage from GM rating New $2.1 billion (face) layer of preferred equity injected $1 billion GM equity contribution in March 2007 Divide
Slide 31: Growth Initiatives
Growth Initiatives Good progress leveraging GM relationships and experience to facilitate growth of diversified wholesale and retail auto finance business Maintaining our commitment to grow business with GM and GM dealers Enrolled 2,400 diversified dealers year to date to participate in National ret
Slide 32: Summary
4, Summary GMAC FINANCIAL SERVICES
Slide 33: Summary
Solid performance in light of tough environment Losses at ResCap more than offset by strong performances at Auto Finance and Insurance Sharp reduction in ResCap's nonprime exposure rendered company less vulnerable to U.S. mortgage market volatility Given continued risks in U.S. residential mortgage
Slide 34: Supplemental Charts
5. Supplemental Charts GMAC FINANCIAL SERVICES
Slide 35: Auto Finance - Condensed Income Statement
Auto Finance - Condensed Income Statement 31
Slide 36: ResCap - Condensed Income Statement
ResCap - Condensed Income Statement 32
Slide 37: Insurance - Condensed Income Statement
Insurance - Condensed Income Statement 33
Slide 38: Reconciliation of Managed to Serviced Assets
Reconciliation of Managed to Serviced Assets 34 * Retail receivables included in whole loan sales and full securitization transactions where GMAC is no longer exposed to credit and/or interest rate risk
Slide 39: Reconciliation of Insurance Core Earnings
Reconciliation of Insurance Core Earnings 35 Amount within premium tax and other expense in Forms 10-Q and 10-K Amount within investment income in Forms 10-Q and 10-K
Slide 40: Q&A
6.Q&A GMAC FINANCIAL SERVICES