Slide 1: Ally Financial Inc. 4Q 2020 Earnings Review
Ally Financial Inc. 4Q 2020 Earnings Review January 22, 2021 4Q 2020 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: Annual
GAAP and Core Results: Annual ($ millions except per share data) 2020 2019 2018 2017 2016 2015 2014 GAAP net income (loss) attributable to common shareholders ("NIAC") $ 1,085 $ 1,715 $ 1,263 $ 929 $ 1,037 $ (1,282) $ 882 Core net income attributable to common shareholders (1)(2) $ 1,141 $ 1,472 $ 1
Slide 4: GAAP and Core Results: Quarterly
GAAP and Core Results: Quarterly ($ millions except per share data) 4Q 20 3Q 20 2Q 20 1Q 20 4Q 19 GAAP net income (loss) attributable to common shareholders (NIAC) $ 687 $ 476 $ 241 $ (319) $ 378 (1)(2) Core net income (loss) attributable to common shareholders $ 606 $ 473 $ 228 $ (166) $ 364 GAAP e
Slide 5: Ally Priorities and 2020 Focus
Ally Priorities and 2020 Focus ‘Do It Right’ Culture and Values. Prioritize our people, our customers and our communities Leading, Growing Businesses, Accelerating Momentum. ‘Be Even Better’ through innovative products and leading service levels Strong Foundations, Balanced Approach. Disciplined, dy
Slide 6: 2020 Full-Year Highlights
2020 Full-Year Highlights Do It Right Culture | Relentless Customer Focus | Steady Execution • Adjusted EPS(1) of $3.03 | Core ROTCE(1) of 9.1% | CET1 capital ratio of 10.6% • Adjusted Total Net Revenue(1) of $6.69 billion, +6% YoY | Strong credit performance across all portfolios • Combined result
Slide 7: Ally's Sustainable Competitive Advantages
Ally’s Sustainable Competitive Advantages Auto & Insurance: Established, Leading Platforms Integrated Dealer Partner + Broad-Market Reach 18,700+ Dealers | 10-years of Growth | 4M+ Auto Customers | 2.6M U.S. Insurance Customers Full-Product Suite + Real-time Market Insights Tech, Digital Tools & Dat
Slide 8: Quarterly Core Metric Trends
Quarterly Core Metric Trends Adjusted Earnings Per Share(1) Adjusted Total Net Revenue(2) ($ millio ns) $1,879 $1.60 $1.25 $1,680 $567 $1,620 $1,622 $1,606 $0.91 $0.92 $0.97 $1.01 $0.95 $1,556 $1,535 $1,557 $0.83 $1,521 $1,528 $0.80 $1,492 $424 $471 $0.70 $0.68 $0.61 $1,463 $1,471 $458 $451 $393 $39
Slide 9: Revenue and Customer Evolution
Revenue and Customer Evolution Ongoing Revenue Expansion | 10+ Years of Customer Growth Adjusted Total Net Revenue(1) ($ billions) (1) (1) Net financing revenue (ex. Core OID) Adj. other revenue $6.7B $6.0B $5.5B $2.0 $5.0B $1.5 $1.5 $1.4 $4.5 $4.7 $3.5 $4.0 2014 2016 2018 2020 (1) Represents a non-
Slide 10: Balance Sheet Growth and Optimization
Balance Sheet Growth and Optimization Sustained Asset Growth | Optimization Across the Balance Sheet Balance Sheet Trends (EOP Assets, $ billions) $171B $176B Ally Lending $0.4 $156B $6.0 Corp Finance $143B $15.1 Mortgage $1.9 Inv. Securities $7.5 $33.0 & Other (1) $18.0 $4.2 $14.9 Cash $34.0 $23.1
Slide 11: 4Q and Full-Year 2020 Financial Results
4Q and Full-Year 2020 Financial Results ($ millions; except per share data) 4Q 20 3Q 20 4Q 19 2020 2019 (1) $ 1,312 $ 1,209 $ 1,164 $ 4,739 $ 4,662 Net financing revenue (ex. Core OID) Core OID (9) (9) (8) (36) (29) Net financing revenue $ 1,303 $ 1,200 $ 1,156 $ 4,703 $ 4,633 (2) 567 471 458 1,954
Slide 12: Balance Sheet and Net Interest Margin
Balance Sheet and Net Interest Margin ($ millions) 4Q 20 3Q 20 4Q 19 2020 2019 Average Average Average Average Average Balance Yield Balance Yield Balance Yield Balance Yield Balance Yield Retail Auto Loan $ 73,401 6.57% $ 72,999 6.56% $ 72,626 6.68% $ 72,805 6.54% $ 72,268 6.60% Retail Auto Loan (e
Slide 13: Deposits
Deposits • Deposits of $137.0 billion, up $16.3 billion or 13% YoY Retail Deposit Balances – Retail deposits of $124.4 billion, up $3.6 billion QoQ and ($ billions, EoP) Retail Brokered / Other Customer Retention Rate $20.6 billion YoY – Existing customers drove 56% of growth in 2020 – Industry- $13
Slide 14: Capital Ratios and Shareholder Distributions
Capital Ratios and Shareholder Distributions • Preliminary 4Q 2020 CET1 ratio of 10.6% Capital Ratios and Risk-Weighted Assets – Capital position reflects earnings growth, lower commercial 14.1% 13.8% 14.1% floorplan and suspension of share repurchase program 12.8% 12.8% 12.1% 12.4% 11.9% 11.2% 10.9
Slide 15: Asset Quality: Key Metrics
Asset Quality: Key Metrics Consolidated Net Charge-Offs Net Charge-Off Activity Allowance as % of Annualized NCOs Annualized NCO Rate ($ millions) 700% 650% Net Charge-Offs 3Q 19 4Q 19 1Q 20 2Q 20 3Q 20 4Q 20 600% 550% 0.91% Retail Auto $ 253 $ 271 $ 262 $ 137 $ 117 $ 186 500% 0.83% 0.84% 450% 0.73%
Slide 16: Asset Quality: Coverage and Reserves
Asset Quality: Coverage and Reserves Consolidated Coverage Ratio Retail Auto Coverage Ratio ($ billions) ($ billions) Reserve - $ Reserve - % Reserve - $ Reserve - % 2.85% 2.87% 2.78% 4.09% 4.06% 3.95% 2.54% 3.91% 2.03% 3.34% 0.99% $2.8B $3.0B $3.0B $2.9B $3.2B $3.4B $3.4B $3.3B 1.49% $2.4B $2.6B $1
Slide 17: Auto Finance
Auto Finance • Pre-tax income of $563 million, up $162 million YoY Increase/(Decrease) vs. and down $3 million QoQ Key Financials ($ millions) 4Q 20 3Q 20 4Q 19 Net financing revenue $ 1,153 $ 51 $ 92 – Net financing revenue up YoY due to higher gains from off- Total other revenue 56 (5) (5) lease v
Slide 18: Auto Finance Key Metrics
Auto Finance Key Metrics Consumer Originations Consumer Origination Mix ($ billions; % of $ originations) (% of $ originations) 688 691 686 685 687 690 $9.3 $9.8 $9.1 $9.1 50% 49% 55% 55% 51% $8.1 60% $7.2 46% 50% 48% 44% 50% 14% 14% 13% 50% 13% 14% 12% 28% 29% 26% 29% 29% 36% 37% 32% 36% 28% 28% 31
Slide 19: Insurance
Insurance • Pre-tax income of $183 million, up $69 million YoY Increase/(Decrease) vs. and up $105 million QoQ Key Financials ($ millions) 4Q 20 3Q 20 4Q 19 Premiums, service revenue earned and other $ 290 $ 11 $ 2 – Results positively impacted by favorable performance of the Losses and loss adjustm
Slide 20: Corporate Finance
Corporate Finance • Pre-tax income of $64 million, up $14 million YoY and Increase/(Decrease) vs. up $4 million QoQ Key Financials ($ millions) 4Q 20 3Q 20 4Q 19 Net financing revenue $ 79 $ 4 $ 15 – Net financing revenue increase YoY reflects higher loan balances Adjusted total other revenue (1) 16
Slide 21: Mortgage Finance
Mortgage Finance • Pre-tax income of $7 million, up $5 million YoY and Increase/(Decrease) vs. down $19 million QoQ Key Financials ($ millions) 4Q 20 3Q 20 4Q 19 Net financing revenue $ 20 $ (10) $ (16) – Net financing revenue declined QoQ and YoY reflecting Total other revenue 37 1 31 ongoing eleva
Slide 22: Financial Outlook
Financial Outlook Steady execution, delivering against our long-term strategic objectives (1) Progression of Core ROTCE Sustainable, Organic Growth ✓ Expanding NIM (Lo/Mid 3%) and ~15% Net Financing Revenue ✓ Steadily Expanding Other Revenue Ongoing Optimization ✓ Expanding NIM (3%+) and ~12%+ ✓ Pos
Slide 23: Strategic Priorities
Strategic Priorities ‘Do It Right’ culture | Relentless focus on employees, customer & communities Leading, adaptable Auto and Insurance Consumer & businesses and digitally-based bank platform Commercial Lender Ongoing customer growth & relationship Savings & deepening across scalable platforms Insu
Slide 24: Supplemental
Supplemental 4Q 2020 Preliminary Results 24
Slide 25: Results by Segment
Supplemental Results by Segment Pre-Tax Income ($ millions) 2020 2019 4Q 20 3Q 20 4Q 19 Automotive Finance $ 1,285 $ 1,618 $ 563 $ 566 $ 401 Insurance 284 315 183 78 114 Dealer Financial Services $ 1,569 $ 1,933 $ 746 $ 644 $ 515 Corporate Finance 88 153 64 60 50 Mortgage Finance 53 40 7 26 2 Corpor
Slide 26: Funding
Supplemental Funding • Strong deposit portfolio growth has continued to Ally Financial Ratings Details reduce reliance on wholesale funding markets LT Debt ST Debt Outlook Date – In 4Q, Ally paid down $1.75 billion of fixed-rate FHLB Fitch BBB- F3 Negative 8/12/2020 borrowings at a weighted average
Slide 27: Corporate and Other
Supplemental Corporate and Other • Corporate and Other activity reflects: Increase/(Decrease) vs. Key Financials ($ millions) 4Q 20 3Q 20 4Q 19 – Centralized asset and liability management Net financing revenue $ 43 $ 58 $ 61 Total other revenue 147 107 81 – Corporate allocation activities Total net
Slide 28: Interest Rate Sensitivity
Supplemental Interest Rate Sensitivity Net Financing Revenue Impacts (1): Baseline vs. Forward Curve 4Q 20 3Q 20 ($ millions) Gradual (2) Instantaneous Gradual (2) Instantaneous (3) -25 bps $ (3) $ (40) $ (1) $ (36) +100 bps $ 32 $ 68 $ 88 $ 181 Stable rate environment n/m $ (8) n/m $ 3 (1) Net fina
Slide 29: Deferred Tax Asset and Tax Rate
Supplemental Deferred Tax Asset and Tax Rate Deferred Tax Asset / (Liability) 4Q 20 3Q 20(1) ($ millions) Gross DTA/(DTL) Valuation Net DTA/(DTL) Net DTA/(DTL) Balance Allowance Balance Balance Net Operating Loss (Federal) $ 7 $ - $ 7 $ 7 Tax Credit Carryforwards 1,786 (734) 1,052 1,085 State/Local
Slide 30: 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 31: Notes on Non-GAAP and Other Financial Measures
Supplemental Notes on Non-GAAP and Other Financial Measures 11) 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 is no comparabl
Slide 32: GAAP to Core Results: Adjusted EPS - Annual
Supplemental GAAP to Core Results: Adjusted EPS - Annual Adjusted Earnings per Share ("Adjusted EPS") 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 $ 1,037 $ (1,282) $ 882 Discontinued
Slide 33: GAAP to Core Results: Adjusted EPS - Quarterly
Supplemental GAAP to Core Results: Adjusted EPS - Quarterly Adjusted Earnings per Share ("Adjusted EPS") QUARTERLY TREND 4Q 20 3Q 20 2Q 20 1Q 20 4Q 19 3Q 19 2Q 19 1Q 19 4Q 18 3Q 18 2Q 18 1Q 18 4Q 17 Numerator ($ millions) GAAP net income attributable to common shareholders $ 687 $ 476 $ 241 $ (319)
Slide 34: GAAP to Core Results: Adjusted TBVPS - Annual
Supplemental GAAP to Core Results: Adjusted TBVPS - Annual Adjusted Tangible Book Value per Share ("Adjusted TBVPS") FY 2020 FY 2019 FY 2018 FY 2017 FY 2016 FY 2015 FY 2014 Numerator ($ billions) GAAP shareholder's equity $ 14.7 $ 14.4 $ 13.3 $ 13.5 $ 13.3 $ 13.4 $ 15.4 Preferred equity - - - - - (0
Slide 35: GAAP to Core Results: Adjusted TBVPS - Quarterly
Supplemental GAAP to Core Results: Adjusted TBVPS - Quarterly Adjusted Tangible Book Value per Share ("Adjusted TBVPS") QUARTERLY TREND 4Q 20 3Q 20 2Q 20 1Q 20 4Q 19 3Q 19 2Q 19 1Q 19 4Q 18 3Q 18 2Q 18 1Q 18 4Q 17 Numerator ($ billions) GAAP common shareholder's equity $ 14.7 $ 14.1 $ 13.8 $ 13.5 $
Slide 36: GAAP to Core Results: Core ROTCE - Annual
Supplemental 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 $ 1,037 $ (1,282) $ 882 Discont
Slide 37: GAAP to Core Results: Core ROTCE - Quarterly
Supplemental GAAP to Core Results: Core ROTCE - Quarterly Core Return on Tangible Common Equity ("Core ROTCE") QUARTERLY TREND 4Q 20 3Q 20 2Q 20 1Q 20 4Q 19 Numerator ($ millions) GAAP net income attributable to common shareholders $ 687 $ 476 $ 241 $ (319) $ 378 Discontinued operations, net of tax
Slide 38: GAAP to Core Results: Adjusted Efficiency Ratio - Annual
Supplemental GAAP to Core Results: Adjusted Efficiency Ratio - Annual Adjusted Efficiency Ratio FY 2020 FY 2019 FY 2018 FY 2017 FY 2016 FY 2015 FY 2014 Numerator ($ millions) GAAP noninterest expense $ 3,833 $ 3,429 $ 3,264 $ 3,110 $ 2,939 $ 2,761 $ 2,948 Rep and warrant expense (0) (0) 3 0 6 13 10
Slide 39: GAAP to Core Results: Adjusted Efficiency Ratio - Quarterly
Supplemental GAAP to Core Results: Adjusted Efficiency Ratio - Quarterly Adjusted Efficiency Ratio QUARTERLY TREND 4Q 20 3Q 20 2Q 20 1Q 20 4Q 19 Numerator ($ millions) GAAP noninterest expense $ 1,023 $ 905 $ 985 $ 920 $ 880 Rep and warrant expense (0) - - - - Insurance expense (246) (268) (322) (25
Slide 40: Notes on Non-GAAP and Other Financial Measures
Supplemental Notes on Non-GAAP and Other Financial Measures ($ millions) FY 2020 FY 2019 FY 2018 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) GAAP Repositioning value of e
Slide 41: Notes on Non-GAAP and Other Financial Measures
Supplemental Notes on Non-GAAP and Other Financial Measures ($ millions) FY 2017 FY 2016 FY 2015 FY 2014 Core OID & Change in fair Core OID & Change in fair Core OID & Change in fair Core OID & Change in fair (1) (1) (1) GAAP Repositioning value of equity Non-GAAP GAAP Repositioning value of equity
Slide 42: Notes on Non-GAAP and Other Financial Measures
Supplemental Notes on Non-GAAP and Other Financial Measures ($ millions) 4Q 20 3Q 20 4Q 19 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 Repositioning Non-GA
Slide 43: 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 2020 FY 2019 FY 2018 FY 2017 FY 2016 FY 2015 FY 2014 GAAP Net Financing Revenue $ 4,703 $ 4,633 $ 4,390 $ 4,221 $ 3,907 $ 3,719 $ 3,375 Core OID 36 29 86 71 57 45 172 Net Financing Revenu
Slide 44: 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) 4Q 20 3Q 20 2Q 20 1Q 20 4Q 19 3Q 19 2Q 19 1Q 19 4Q 18 3Q 18 2Q 18 1Q 18 4Q 17 GAAP Net Financing Revenue $ 1,303 $ 1,200 $ 1,054 $ 1,146 $ 1,156 $ 1,188 $ 1,157 $ 1,132 $ 1,1