Slide 1: Ally Financial Inc. 4Q 2023 Earnings Review
4Q 2023 Preliminary Results Ally Financial Inc. 4Q 2023 Earnings Review January 19, 2024 Contact Ally Investor Relations at (866) 710-4623 or investor.relations@ally.com 1
Slide 2: Forward-Looking Statements and Additional Information
4Q 2023 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: Annually
4Q 2023 Preliminary Results GAAP and Core Results: Annually 2023 2022 2021 2020 2019 ($ millions, except per share data) GAAP net income attributable to common shareholders (NIAC) $ 910 $ 1,604 $ 3,003 $ 1,085 $ 1,715 Core net income attributable to common shareholders(1)(2) $ 930 $ 1,929 $ 3,146 $
Slide 4: GAAP and Core Results: Quarterly
4Q 2023 Preliminary Results GAAP and Core Results: Quarterly 4Q 23 3Q 23 2Q 23 1Q 23 4Q 22 ($ millions, except per share data) GAAP net income attributable to common shareholders (NIAC) $ 49 $ 269 $ 301 $ 291 $ 251 (1)(2) Core net income attributable to common shareholders $ 137 $ 252 $ 291 $ 250 $
Slide 5: Purpose-Driven Culture
4Q 2023 Preliminary Results Purpose-Driven Culture Strong leadership team in place to continue to advance our ‘LEAD’ Core Values and ‘Do It Right’ Culture L E A D Look Execute with Act with Deliver externally excellence professionalism results Strive to meet and exceed the Continuously improve with
Slide 6: 2023 Full-Year Highlights
4Q 2023 Preliminary Results 2023 Full-Year Highlights $2.98 | $3.05 8.3% | 11.5% $8.2B | $8.2B 3.35% | 10.69% GAAP Adj. Return on Core GAAP Adj. Total NIM (2) Est. Retail (ex. OID) (3) EPS EPS(1) Common Equity ROTCE (1) Net Revenue Net Revenue(1) Originated Yield 4Q Notable Items • Reached agreement
Slide 7: Established, Market Leading Franchises
4Q 2023 Preliminary Results Established, Market Leading Franchises Proven scale and consistent through the cycle approach Dealer Financial Services 22K 13.8M $40B $1.3B Dealer Consumer Consumer Insurance Relationships Applications Originations Earned Premiums Strengthening Dealer Value Strong Over $
Slide 8: Total Net Revenue
4Q 2023 Preliminary Results Total Net Revenue Revenue expansion and diversification Net Financing Revenue | Other Revenue 76% increase since 2014 Revenue from Insurance, Corporate Finance and Credit Card $1.3B $1.3B $1.7B $2.4B 8
Slide 9: Net Interest Margin
4Q 2023 Preliminary Results Net Interest Margin Transformation of balance sheet driving higher NIM NIM (ex. Core OID)(1) Earning Asset Yield (EAY) EAY: 4.42% EAY: 4.55% EAY: 4.49% EAY: 5.46% EAY: 7.02% Cost of Funds CoF: 1.98% CoF: 1.91% CoF: 1.97% CoF: 1.71% CoF: 3.92% (ex. Core OID)(1) 0.25% Struc
Slide 10: Funding and Liquidity
4Q 2023 Preliminary Results Funding and Liquidity Core funded with stable deposits and strong liquidity position Funding Composition Total Available Liquidity (End of Period) ($ billions) Unsecured Debt Cash and Equivalents FHLB / Other FHLB Unused Pledged Borrowing Capacity Secured Debt FRB Discoun
Slide 11: Capital Optimization
4Q 2023 Preliminary Results Capital Optimization Continuing to optimize capital across all areas of the business • Sale reflects overall strategy to invest resources in growing scale businesses and strengthening relationships with consumer and dealer customers Reached Agreement to • Expected to clos
Slide 12: 4Q and Full-Year 2023 Financial Results
4Q 2023 Preliminary Results 4Q and Full-Year 2023 Financial Results Consolidated Income Statement 4Q 23 3Q 23 4Q 22 2023 2022 ($ millions, except per share data) Net financing revenue $ 1,493 $ 1,533 $ 1,674 $ 6,201 $ 6,850 (1) Core OID 13 12 11 48 42 Net financing revenue (ex. Core OID) (1) 1,506 1
Slide 13: Balance Sheet and Net Interest Margin
4Q 2023 Preliminary Results Balance Sheet and Net Interest Margin 4Q 23 3Q 23 4Q 22 2023 2022 Average Average Average Average Average Balance Yield Balance Yield Balance Yield Balance Yield Balance Yield ($ millions) Retail Auto Loans $ 84,711 8.98% $ 85,131 8.90% $ 83,781 7.98% $ 84,393 8.80% $ 81,
Slide 14: Capital
4Q 2023 Preliminary Results Capital • 4Q ‘23 CET1 ratio of 9.4% and TCE / TA ratio of 5.5% (1) Capital Ratios and Risk-Weighted Assets ($ billions) – Closing of Ally Lending sale in early 2024 adds ~15bps of CET1 Total Capital • $3.8B of CET1 capital above FRB requirement of 7.0% Ratio Tier 1 Ratio
Slide 15: Asset Quality: Key Metrics
4Q 2023 Preliminary Results Asset Quality: Key Metrics Consolidated Net Charge-Offs (NCOs)(1) Net Charge-Off Activity(1) ($ millions) 4Q 22 1Q 23 2Q 23 3Q 23 4Q 23 Annualized NCO Rate Retail Auto $ 347 $ 351 $ 277 $ 393 $ 470 Commercial Auto - - 4 - 19 Mortgage Finance - - - - - NCOs ($M) Corporate
Slide 16: Asset Quality: Coverage and Reserves
4Q 2023 Preliminary Results Asset Quality: Coverage and Reserves Consolidated Coverage QoQ decrease Retail Auto Coverage 3.62% ex. ($ billions) driven by change ($ billions) impacts from in portfolio mix, retail auto loan including sale of sales Ally Lending Reserve (%) Reserve (%) Reserve ($) Reser
Slide 17: Retail Auto Credit Performance
4Q 2023 Preliminary Results Retail Auto Credit Performance 2023 NCOs in-line with guide (1.8%); seasonally adjusted NCOs to peak in first half of 2024 • Full year 2023 NCO rate of 1.77%; 4Q NCOs at low-end of 2.2% - 2.4% guide driven by stable flow-to-loss rates and strong front book performance, pa
Slide 18: Used Vehicle Value Outlook
4Q 2023 Preliminary Results Used Vehicle Value Outlook Used vehicle values expected to decline through first half of 2024 • Ally Used Vehicle Value Index is ↓ 26% vs. the Dec. ‘21 peak, with an additional ~5% ↓ assumed in 2024 – Expect decline in the first half of 2024, followed by stabilization in
Slide 19: Auto Finance: Agile Market Leader
4Q 2023 Preliminary Results Auto Finance: Agile Market Leader #1 #1 #1 #1 Leading Prime Auto Bank Floorplan Bank Retail Auto Dealer Satisfaction Insurance Provider Lender(1) Lender(2) Loan Outstandings(3) J.D. Power Award(4) (F&I, P&C Products) Consumer Applications and Approval Rate Auto Balance Sh
Slide 20: Auto Finance
4Q 2023 Preliminary Results Auto Finance • Auto pre-tax income of $294 million Inc / (Dec) v. Key Financials ($ millions) 4Q 23 3Q 23 4Q 22 – Pre-tax income down YoY, primarily driven by lower net loss Net financing revenue $ 1,330 $ (30) $ 5 performance in prior year period Total other revenue 82 3
Slide 21: Insurance
4Q 2023 Preliminary Results Insurance • Insurance pre-tax income of $129 million and core pre- Inc / (Dec) v. tax income of $62 million(1) Key Financials ($ millions) 4Q 23 3Q 23 4Q 22 Premiums, service revenue earned and other income $ 339 $ 15 $ 34 – $339 million of earned premiums, representing h
Slide 22: Ally Bank: Deposit and Customer Trends
4Q 2023 Preliminary Results Ally Bank: Deposit and Customer Trends #1 $142B 92% $5B 3M 97% Largest All-Digital, Retail Deposit FDIC FY ‘23 Growth Ally Bank Customer Direct U.S. Bank(1) Balances Insured (Balances ↑ Every Quarter) Deposit Customers Retention(2) Total Deposits: Retail & Brokered • Tota
Slide 23: Ally Credit Card
4Q 2023 Preliminary Results Ally Credit Card DTC product offering with compelling return profile despite elevated losses • Digital first, customer centric approach with attractive risk-adjusted return profile – Focused on growing and deepening customer relationships responsibly – Legacy offering ali
Slide 24: Ally Home & Invest
4Q 2023 Preliminary Results Ally Home & Invest Deepening customer relationships and adapting to consumer preferences • Ally Home provides a best-in-class mortgage experience that enables Ally to deliver a frictionless, digital end-to-end experience in an innovative way – Strategically positioned wit
Slide 25: Mortgage Finance
4Q 2023 Preliminary Results Mortgage Finance • Mortgage pre-tax income of $24 million Inc / (Dec) v. Key Financials ($ millions) 4Q 23 3Q 23 4Q 22 – Noninterest expense down $7 million YoY, reflecting the benefit Net financing revenue $ 51 $ (2) $ (4) of variable cost structure Total other revenue 3
Slide 26: Corporate Finance
4Q 2023 Preliminary Results Corporate Finance Inc / (Dec) v. • Corporate Finance pre-tax income of $79 million Key Financials ($ millions) 4Q 23 3Q 23 4Q 22 – Pre-tax income of $307 million in full-year 2023, highest since IPO Net financing revenue $ 105 $ 8 $ 11 • Consistently generating strong ret
Slide 27: Financial Outlook FY 2024
4Q 2023 Preliminary Results Financial Outlook FY 2024 Net Interest Margin 3.25% - 3.30% | 3.40% - 3.50% (FY | Exit Rate) Incl. ↓ ~5 bps impact from pending sale of Ally Lending and Card curtailments Other Revenue ↑ 5 - 10% Average Earning Assets Flat YoY Net Charge Offs 1.4 - 1.5% | ~1.9% (Consolida
Slide 28: Strategic Priorities
4Q 2023 Preliminary Results Strategic Priorities Focused execution on driving long-term value for all stakeholders Ensure culture remains aligned with relentless focus on customers, communities, employees, and shareholders Differentiate as a financial ally for our consumer and commercial customers C
Slide 29: Supplemental
4Q 2023 Preliminary Results Supplemental 29
Slide 30: Results By Segment
Supplemental 4Q 2023 Preliminary Results Results By Segment GAAP to Core pre-tax income Walk Inc / (Dec) v. ($ millions) Segment Detail 2023 2022 4Q 23 3Q 23 4Q 22 2022 3Q 23 4Q 22 Automotive Finance $ 1,614 $ 2,250 $ 294 $ 377 $ 437 $ (636) $ (83) $ (143) Insurance 213 (38) 129 (16) 101 251 145 28
Slide 31: Funding Profile Details
Supplemental 4Q 2023 Preliminary Results Funding Profile Details Funding Mix Deposit Mix Unsecured FHLB / Other Brokered / Other Secured Retail CD Deposits MMA/OSA/ Spend Note: Totals may not foot due to rounding. Note: Other includes sweep deposits, mortgage escrow and other deposits. Totals may no
Slide 32: Corporate and Other
Supplemental 4Q 2023 Preliminary Results Corporate and Other ($ millions) • Pre-tax loss of $462 million and Core pre-tax loss of Inc / (Dec) v. $284 million(1) Key Financials 4Q 23 3Q 23 4Q 22 Net financing revenue $ (26) $ (20) $ (198) – Net financing revenue lower YoY driven by higher interest To
Slide 33: Interest Rate Risk
Supplemental 4Q 2023 Preliminary Results Interest Rate Risk Net Financing Revenue Sensitivity Analysis (1) ($ millions) 4Q 23 3Q 23 (2) (2) Change in interest rates Gradual Instantaneous Gradual Instantaneous -100 bps $ (96) $ (107) $ (111) $ (100) +100 bps $ 88 $ 3 $ 97 $ 101 Stable rate environmen
Slide 34: Deferred Tax Asset
Supplemental 4Q 2023 Preliminary Results Deferred Tax Asset Deferred Tax Asset 4Q 23 3Q 23(1) ($ millions) Gross DTA Valuation Net DTA Net DTA Balance Allowance Balance Balance Net Operating Loss (Federal) $ 8 $ - $ 8 $ 9 Tax Credit Carryforwards 500 (41) 459 242 State/Local Tax Carryforwards 287 (1
Slide 35: Notes on Non-GAAP Financial Measures
Supplemental 4Q 2023 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: Accelerated issu
Slide 36: Notes on Non-GAAP Financial Measures
Supplemental 4Q 2023 Preliminary Results Notes on Non-GAAP Financial Measures 7) Adjusted tangible book value per share (Adjusted TBVPS) is a non-GAAP financial measure that reflects the book value of equity attributable to shareholders even if Core OID balance were accelerated immediately through t
Slide 37: Notes on Non-GAAP Financial Measures
Supplemental 4Q 2023 Preliminary Results Notes on Non-GAAP Financial Measures 14) Core return on tangible common equity (Core ROTCE) is a non-GAAP financial measure that management believes is helpful for readers to better understand the ongoing ability of the company to generate returns on its equi
Slide 38: Notes on Other Financial Measures
Supplemental 4Q 2023 Preliminary Results Notes on Other Financial Measures 1) Change in fair value of equity securities impacts the Insurance, Corporate Finance and Corporate and Other segments. The change reflects fair value adjustments to equity securities that are reported at fair value. Manageme
Slide 39: Additional Notes
Supplemental 4Q 2023 Preliminary Results Additional Notes Page – 5 | Purpose Driven Culture (1) Customers include on-balance sheet Auto, U.S. and Canadian Insurance, active Depositors, on-balance sheet Ally Home DTC Mortgage, Ally Lending, Ally Invest, and Ally Credit Card. (2) Ally Bank Customer Sa
Slide 40: Additional Notes
Supplemental 4Q 2023 Preliminary Results Additional Notes Page – 26 | Corporate Finance (2) Noninterest expense includes corporate allocations of $13 million in 4Q 2023, $14 million in 3Q 2023, and $13 million in 4Q 2022. (3) Change in fair value of equity securities impacts the Corporate Finance se
Slide 41: GAAP to Core Results: Adjusted EPS – Annual
Supplemental 4Q 2023 Preliminary Results GAAP to Core Results: Adjusted EPS – Annual Adjusted Earnings per Share ("Adjusted EPS") FY 2023 FY 2022 FY 2021 FY 2020 FY 2019 FY 2018 FY 2017 Numerator ($ millions) GAAP net income attributable to common shareholders $ 910 $ 1,604 $ 3,003 $ 1,085 $ 1,715 $
Slide 42: GAAP to Core Results: Adjusted EPS – Quarterly
Supplemental 4Q 2023 Preliminary Results GAAP to Core Results: Adjusted EPS – Quarterly Adjusted Earnings per Share ("Adjusted EPS") QUARTERLY TREND 4Q 23 3Q 23 2Q 23 1Q 23 4Q 22 3Q 22 2Q 22 1Q 22 4Q 21 3Q 21 2Q 21 1Q 21 4Q 20 Numerator ($ millions) GAAP net income attributable to common shareholder
Slide 43: GAAP to Core Results: Adjusted TBVPS – Annual
Supplemental 4Q 2023 Preliminary Results GAAP to Core Results: Adjusted TBVPS – Annual Adjusted Tangible Book Value per Share ("Adjusted TBVPS") FY 2023 FY 2022 FY 2021 FY 2020 FY 2019 FY 2018 FY 2017 Numerator ($ billions) GAAP shareholder's equity $ 13.8 $ 12.9 $ 17.1 $ 14.7 $ 14.4 $ 13.3 $ 13.5 P
Slide 44: GAAP to Core Results: Adjusted TBVPS – Quarterly
Supplemental 4Q 2023 Preliminary Results GAAP to Core Results: Adjusted TBVPS – Quarterly Adjusted Tangible Book Value per Share ("Adjusted TBVPS") QUARTERLY TREND 4Q 23 3Q 23 2Q 23 1Q 23 4Q 22 3Q 22 2Q 22 1Q 22 4Q 21 3Q 21 2Q 21 1Q 21 4Q 20 Numerator ($ billions) GAAP shareholder's equity $ 13.8 $
Slide 45: GAAP to Core Results: Core ROTCE – Annual
Supplemental 4Q 2023 Preliminary Results GAAP to Core Results: Core ROTCE – Annual Core Return on Tangible Common Equity ("Core ROTCE") FY 2023 FY 2022 FY 2021 FY 2020 FY 2019 FY 2018 FY 2017 Numerator ($ millions) GAAP net income attributable to common shareholders $ 910 $ 1,604 $ 3,003 $ 1,085 $ 1
Slide 46: GAAP to Core Results: Core ROTCE – Quarterly
Supplemental 4Q 2023 Preliminary Results GAAP to Core Results: Core ROTCE – Quarterly Core Return on Tangible Common Equity ("Core ROTCE") QUARTERLY TREND 4Q 23 3Q 23 2Q 23 1Q 23 4Q 22 3Q 22 2Q 22 1Q 22 4Q 21 3Q 21 2Q 21 1Q 21 4Q 20 Numerator ($ millions) GAAP net income attributable to common share
Slide 47: GAAP to Core Results: Adjusted Efficiency Ratio – Annual
Supplemental 4Q 2023 Preliminary Results GAAP to Core Results: Adjusted Efficiency Ratio – Annual Adjusted Efficiency Ratio FY 2023 FY 2022 FY 2021 FY 2020 FY 2019 FY 2018 FY 2017 Numerator ($ millions) GAAP noninterest expense $ 5,163 $ 4,687 $ 4,110 $ 3,833 $ 3,429 $ 3,264 $ 3,110 Rep and warrant
Slide 48: GAAP to Core Results: Adjusted Efficiency Ratio – Quarterly
Supplemental 4Q 2023 Preliminary Results GAAP to Core Results: Adjusted Efficiency Ratio – Quarterly Adjusted Efficiency Ratio QUARTERLY TREND 4Q 23 3Q 23 2Q 23 1Q 23 4Q 22 Numerator ($ millions) GAAP noninterest expense $ 1,416 $ 1,232 $ 1,249 $ 1,266 $ 1,266 Rep and warrant expense - - - - - Insur
Slide 49: Non-GAAP Reconciliation: Core Income – Annual
Supplemental 4Q 2023 Preliminary Results Non-GAAP Reconciliation: Core Income – Annual ($ millions) FY 2023 FY 2022 FY 2021 Core OID & Change in fair Core OID & Change in fair Core OID & Change in fair GAAP Repositioning value of equity Non-GAAP (1) GAAP Repositioning value of equity Non-GAAP (1) GA
Slide 50: Non-GAAP Reconciliation: Core Income – Quarterly
Supplemental 4Q 2023 Preliminary Results Non-GAAP Reconciliation: Core Income – Quarterly ($ millions) 4Q 23 3Q 23 4Q 22 Change in fair Change in fair Change in fair GAAP Core OID value of equity Repositioning Non-GAAP (1) GAAP Core OID value of equity Repositioning Non-GAAP (1) GAAP Core OID value
Slide 51: Non-GAAP Reconciliations – Annual
Supplemental 4Q 2023 Preliminary Results Non-GAAP Reconciliations – Annual Net Financing Revenue (ex. Core OID) ($ millions) FY 2023 FY 2022 FY 2021 FY 2020 FY 2019 FY 2018 FY 2017 GAAP Net Financing Revenue [x] $ 6,201 $ 6,850 $ 6,167 $ 4,703 $ 4,633 $ 4,390 $ 4,221 Core OID 48 42 38 36 29 86 71 Ne
Slide 52: Non-GAAP Reconciliations – Quarterly
Supplemental 4Q 2023 Preliminary Results Non-GAAP Reconciliations – Quarterly Net Financing Revenue (ex. Core OID) QUARTERLY TREND ($ millions) 4Q 23 3Q 23 2Q 23 1Q 23 4Q 22 3Q 22 2Q 22 1Q 22 4Q 21 3Q 21 2Q 21 1Q 21 4Q 20 GAAP Net Financing Revenue [x] $ 1,493 $ 1,533 $ 1,573 $ 1,602 $ 1,674 $ 1,719