Ally Financial Inc. · NYSE:ALLY
Ally Financial — Q1 2019 Earnings Presentation
30 slides from Ally Financial's earnings presentation, Apr 18, 2019
Slide 1: Ally Financial Inc. 1Q 2019 Earnings Review
Ally Financial Inc. 1Q 2019 Earnings Review April 18, 2019 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) 1Q 19 4Q 18 3Q 18 2Q 18 1Q 18 GAAP net income attributable to common shareholders ("NIAC") $ 374 $ 290 $ 374 $ 349 $ 250 Core net income attributable to common shareholders (1)(2) $ 325 $ 382 $ 386 $ 358 $ 300 GAAP earnings per common share ("
Slide 4: First Quarter 2019 Highlights
First Quarter 2019 Highlights Delivering Sustained Progress > Adjusted EPS(1) of 80 cents – up 17% YoY | Core ROTCE(1) of 10.9%, up 37 bps YoY ▪ Adjusted total net revenue(1) over $1.5 billion – up 5% YoY > Steady execution of auto optimization – driving improved risk-adjusted returns ▪ Consumer aut
Slide 5: Core Metric Trends
Core Metric Trends Adjusted Earnings Per Share(1) Adjusted Total Net Revenue(2) $0.91 $0.92 ($ millio ns) $1,556 $1,535 $0.83 $0.80 $1,521 $1,480 $1,492 $1,472 $1,463 $1,471 $393 $396 $0.70 $0.68 $392 $381 $379 $356 $0.65 $1,372 $1,399 $1,383 $1,391 $388 $394 $0.58 $1,344 $0.56 $0.54 $388 $0.52 $0.5
Slide 6: First Quarter 2019 Financial Results
First Quarter 2019 Financial Results ($ millions; except per share data) Increase / (Decrease) vs. 1Q 19 4Q 18 1Q 18 4Q 18 1Q 18 (1) Net financing revenue (excluding Core OID) $ 1,139 $ 1,163 $ 1,069 $ (25) $ 70 Core OID (7) (23) (20) 17 13 Net financing revenue (as reported) $ 1,132 $ 1,140 $ 1,049
Slide 7: Balance Sheet and Net Interest Margin
Balance Sheet and Net Interest Margin ($ millions) 1Q 19 4Q 18 1Q 18 Average Average Average Balance Yield Balance Yield Balance Yield Retail Auto Loan $ 70,981 6.47% $ 69,982 6.39% $ 68,727 5.90% Auto Lease (net of depreciation) 8,389 5.56% 8,516 5.82% 8,629 5.12% Commercial Auto 35,641 4.80% 36,81
Slide 8: Deposits
Deposits • Total deposits of $113.3 billion, up 16% YoY Retail Deposit Balance Growth – Customer retention of 96% - stable and strong • Deposits represent 70% of total funding(1) Deposit Levels (EOP) and Customer Retention Rate ($ billions) $113.3 • Cumulative retail portfolio beta of 44% since 3Q 1
Slide 9: Capital
Capital • Preliminary fully phased-in Basel III CET1 ratio of 9.3% Capital Ratios(1) and Risk-Weighted Assets – Consistent capital ratios – growing risk-weighted assets YoY 12.5% 12.6% 12.7% 12.3% 12.5% • 1Q 19 share repurchases reduced total outstanding 11.0% 11.1% 11.1% 10.8% 11.0% 9.3% 9.4% 9.3%
Slide 10: Asset Quality
Asset Quality Consolidated Net Charge-Offs Provision Expense ($ millions) 1.01% Provision Expense 4Q 17 1Q 18 2Q 18 3Q 18 4Q 18 1Q 19 0.85% 0.84% 0.85% Retail Auto $ 286 $ 253 $ 168 $ 229 $ 261 $ 257 0.75% 0.73% 0.66% Commercial Auto 2 6 2 - 1 5 0.57% Mortgage Finance 2 2 - 2 (3) 2 Corporate Finance
Slide 11: Auto Finance – Results
Auto Finance – Results • Pre-tax income of $329 million, up $61 million YoY Increase/(Decrease) vs. and down $6 million QoQ Key Financials ($ millions) 1Q 19 4Q 18 1Q 18 Net financing revenue $ 980 $ 1 $ 71 Total other revenue 68 8 2 – Net financing revenue increased YoY due to higher Total net reve
Slide 12: Auto Finance – Key Metrics
Auto Finance – Key Metrics Consumer Originations Origination Mix ($ billions; % of $ originations) (% of $ originations) $9.1 $9.5 $9.6 $9.2 $8.1 $8.2 42% 50% 51% 53% 52% 56% 39% 44% 45% 49% 47% 47% 14% 11% 13% 12% 10% 10% 29% 26% 28% 27% 26% 25% 44% 39% 36% 35% 38% 34% 32% 30% 27% 26% 27% 26% 10% 1
Slide 13: Insurance
Insurance • Pre-tax income of $145 million; YoY and QoQ Increase/(Decrease) vs. Key Financials ($ millions) 1Q 19 4Q 18 1Q 18 increase due to higher fair value of equity securities Premiums, service revenue earned and other $ 265 $ (6) $ 5 Losses and loss adjustment expenses 59 5 (4) • Core pre-tax
Slide 14: Corporate Finance
Corporate Finance • Pre-tax income of $13 million Increase/(Decrease) vs. • Core pre-tax income(1) of $9 million, down $26 Key Financials ($ millions) 1Q 19 4Q 18 1Q 18 Net financing revenue $ 54 $ 3 $ 8 million YoY and $16 million QoQ Total other revenue (adjusted) (1) 7 1 (7) Total net revenue (ad
Slide 15: Mortgage Finance
Mortgage Finance • Pre-tax income of $13 million, up $5 million YoY Increase/(Decrease) vs. Key Financials ($ millions) 1Q 19 4Q 18 1Q 18 – Net financing revenue up YoY driven by asset balance Net financing revenue $ 50 $ 2 $ 7 growth from bulk purchase activity Total other revenue 2 - 1 Total net r
Slide 16: Conclusion
Conclusion Executing Along Strategic Path – Well-Positioned to Achieve 2019 Outlook > Ongoing optimization of auto & insurance Dominant Franchises Superior Digital Auto Finance > Sustained deposit growth & customer acquisition Bank Products & Leader Services > Scale in expanded digital product offer
Slide 17: Supplemental
Supplemental 17
Slide 18: Results by Segment
Supplemental Results by Segment Pre-Tax Income Increase/(Decrease) vs. ($ millions) 1Q 19 4Q 18 1Q 18 4Q 18 1Q 18 Automotive Finance $ 329 $ 335 $ 268 $ (6) $ 61 Insurance 145 (13) 27 158 118 Dealer Financial Services $ 474 $ 322 $ 295 $ 152 $ 179 Corporate Finance 13 21 29 (8) (16) Mortgage Finance
Slide 19: Funding and Liquidity
Supplemental Funding and Liquidity • Ally Bank funded assets at 90% up 6 pts YoY Growth in Bank Funded Assets • Deposits at 70% of total funding (excluding Core ($ billions) $180.1 OID balance)(a) up 6 pts YoY $153.3 $156.5 $162.1 $170.0 • $1.0 billion of new retail secured funding in 1Q 19 90% • To
Slide 20: Corporate and Other
Supplemental Corporate and Other • Corporate and Other includes the impact of Increase/(Decrease) vs. centralized asset and liability management, Key Financials ($ millions) 1Q 19 4Q 18 1Q 18 corporate overhead allocation activities, the Net financing revenue $ 36 $ (11) $ (3) Total other revenue 25
Slide 21: Interest Rate Sensitivity
Supplemental Interest Rate Sensitivity Net Financing Revenue Impacts (1): Baseline vs. Forward Curve 1Q 19 4Q 18 ($ millions) Gradual (2) Instantaneous Gradual (2) Instantaneous -100 bp $ 5 $ (10) $ (20) $ (34) +100 bp $ 3 $ (23) $ 51 $ 10 Stable rate environment n/m $ (0) n/m $ (10) (1) Net financi
Slide 22: Deferred Tax Asset
Supplemental Deferred Tax Asset Deferred Tax Asset 1Q 19(1) 4Q 18 ($ 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 1,627 (965) 662 833 State/Local Tax Carryforwards 156 (96) 60 7
Slide 23: 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 24: 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 1Q 19 4Q 18 3Q 18 2Q 18 1Q 18 4Q 17 3Q 17 2Q 17 1Q 17 4Q 16 3Q 16 2Q 16 1Q 16 Numerator ($ millions) GAAP net income attributable to common shareholders $ 374 $ 290 $ 374 $ 34
Slide 25: GAAP to Core Results – Adjusted TBVPS
Supplemental GAAP to Core Results – Adjusted TBVPS Adjusted Tangible Book Value per Share ("Adjusted TBVPS") QUARTERLY TREND 1Q 19 4Q 18 3Q 18 2Q 18 1Q 18 4Q 17 3Q 17 2Q 17 1Q 17 4Q 16 3Q 16 2Q 16 1Q 16 Numerator ($ billions) GAAP shareholder's equity $ 13.7 $ 13.3 $ 13.1 $ 13.1 $ 13.1 $ 13.5 $ 13.6
Slide 26: GAAP to Core Results – Core ROTCE
Supplemental GAAP to Core Results – Core ROTCE Core Return on Tangible Common Equity ("Core ROTCE") QUARTERLY TREND 1Q 19 4Q 18 3Q 18 2Q 18 1Q 18 Numerator ($ millions) GAAP net income attributable to common shareholders $ 374 $ 290 $ 374 $ 349 $ 250 Discontinued operations, net of tax 1 (1) - (1) 2
Slide 27: GAAP to Core Results – Adjusted Efficiency Ratio
Supplemental GAAP to Core Results – Adjusted Efficiency Ratio Adjusted Efficiency Ratio QUARTERLY TREND 1Q 19 4Q 18 3Q 18 2Q 18 1Q 18 Numerator ($ millions) GAAP noninterest expense $ 830 $ 804 $ 807 $ 839 $ 814 Rep and warrant expense - 1 (0) 2 0 Insurance expense (227) (215) (241) (268) (231) Adju
Slide 28: 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) 1Q 19 4Q 18 3Q 18 2Q 18 1Q 18 Numerator Common equity tier 1 capital $ 13.6 $ 13.4 $ 13.4 $ 13.3 $ 13.1 Denominator Risk-weighted assets (transition) $ 145.9 $ 146.6
Slide 29: Notes on Non-GAAP and Other Financial Measures
Supplemental Notes on Non-GAAP and Other Financial Measures ($ millions) 1Q 19 4Q 18 1Q 18 Change in the Change in the Change in the Core OID & Core OID & Core OID & fair value of fair value of fair value of GAAP Repositioning Non-GAAP (1) GAAP Repositioning Non-GAAP (1) GAAP Repositioning Non-GAAP
Slide 30: Notes on Non-GAAP and Other Financial Measures
Supplemental Notes on Non-GAAP and Other Financial Measures Original issue discount amortization expense QUARTERLY TREND ($ millions) 1Q 19 4Q 18 3Q 18 2Q 18 1Q 18 4Q 17 3Q 17 2Q 17 1Q 17 4Q 16 3Q 16 2Q 16 1Q 16 Core original issue discount (Core OID) amortization expense (1) $ 7 $ 23 $ 22 $ 21 $ 20