Slide 1: Ally Financial Inc. 3Q 2016 Earnings Review
Ally Financial Inc. 3Q 2016 Earnings Review October 26, 2016 Contact Ally Investor Relations at (866) 710-4623 or investor.relations@ally.com
Slide 2: Forward-Looking Statements and Additional Information
Forward-Looking Statements and Additional Information The following should be read in conjunction with the financial statements, notes and other information contained in the Company’s Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K. This information is pr
Slide 3: GAAP and Core Results
GAAP and Core Results QUARTERLY TREND 3Q 16 2Q 16 1Q 16 4Q 15 3Q 15 GAAP net income available to common ("NIAC") $ 209 $ 345 $ 235 $ (953) $ 230 (1)(2) Core net income available to common $ 271 $ 263 $ 253 $ 249 $ 244 GAAP earnings per common share ("EPS")(diluted, NIAC) $ 0.43 $ 0.71 $ 0.49 $ (1.97
Slide 4: Third Quarter Highlights
Third Quarter Highlights P• Strong core operating performance − Continuing trend of strong EPS growth - Adjusted EPS(1) of $0.56, up 11% YoY − On pace for over $12 billion of annual total deposit growth − Estimated risk-adjusted retail auto yield(2) up 53 bps YoY Deliberate portfolio mix shift dri
Slide 5: Third Quarter Financial Results
Third Quarter Financial Results Increase / (Decrease) vs. ($ millions except per share data) 3Q 16 2Q 16 3Q 15 2Q 16 3Q 15 (1) Net financing revenue (excld OID) $ 1,011 $ 998 $ 981 $ 13 $ 29 OID expense (15) (14) (11) (1) (3) Net financing revenue (as reported) 996 984 970 12 26 Total other revenue
Slide 6: Net Interest Margin
Net Interest Margin • Net Interest Margin (“NIM”) of 2.69% up 5 bps YoY driven by higher retail auto yields • NIM (excluding OID) (1) of 2.73% up 6 bps YoY • Increased asset sensitivity during 3Q (see page 24 for details) Net Interest Margin ($ millions) 3Q 16 2Q 16 3Q 15 Average Average Average Bal
Slide 7: Significant Savings as Unsecured Debt Declines
Significant Savings as Unsecured Debt Declines Attractive uses of $12+ billion of annual deposit growth expected to drive higher net interest income • Significant amount of unsecured long-term debt maturities over the next several years • Expect significant decline in unsecured debt footprint as mat
Slide 8: Illustrative View of Potential Deposit Growth Value
Illustrative View of Potential Deposit Growth Value Deposit Growth next 3-4 years Attractive Uses Incremental Profits $40+ billion 2.0%+ Contribution Margin on average $800+ million Incremental Revenue Retire Unsecured Debt ~$1.20-$1.40 of Retail incremental annual Reduce Secured Debt Swee
Slide 9: Deposits
Deposits • Continued strong retail deposit growth in 3Q 16 Stable, consistent growth of retail deposits – $2.6 billion of retail deposit growth QoQ and $10.4 Ally Bank Deposit Levels (EOP) billion YoY ($ billions) $75.4 $70.0 $72.5 • Total deposits up $11.7 billion YoY $63.7 $66.2 $11.3 $11.6 $11.0
Slide 10: Capital
Capital • Preliminary fully phased-in Basel III CET1 ratio of Capital Ratios(1) and Risk-Weighted Assets 9.3% 12.9% 13.0% 12.8% 12.7% • Risk-weighted assets relatively flat while net 11.9% 12.5% 11.1% 11.5% 11.1% 11.1% financing revenue has steadily increased 9.6% 9.3% 9.2% 9.3% 8.7% • Initiated $0.
Slide 11: Asset Quality
Asset Quality Consolidated Net Charge-Offs Provision Expense ($ millions) 0.72% 0.75% 0.68% 0.64% Provision Expense 2Q 15 3Q 15 4Q 15 1Q 16 2Q 16 3Q 16 0.61% 0.61% 0.54% Retail Auto $ 152 $ 200 $ 229 $ 207 $ 168 $ 269 0.39% Commercial Auto (20) 1 7 2 2 1 Mortgage Finance 4 3 (2) 3 - 1 244% Corporate
Slide 12: Prime, Secured Balance Sheet
Prime, Secured Balance Sheet • Portfolio consists of predominately prime, short duration, secured consumer and commercial loans Portfolio 3Q 2016 3Q 2016 Asset Class Primary Drivers (9/30/16) NCO% NCO $ Note: Net Charge-Off(“NCO”); Portfolio is end-of-period balances as of 9/30/16 Credit mix, used v
Slide 13: Auto Finance – Results
Auto Finance – Results • Auto Finance reported pre-tax income of $319 million in Increase/(Decrease) vs. 3Q, down $4 million YoY and down $107 million QoQ Key Financials ($ millions) 3Q 16 2Q 16 3Q 15 Net financing revenue $ 933 $ 4 $ 63 – Net financing revenue higher YoY due to portfolio mix Total
Slide 14: Improving Risk-Adjusted Margin
Improving Risk-Adjusted Margin Improving risk-adjusted margin in retail auto loan portfolio • Net financing revenue growth ~1.8x provision expense over the comparable last 12 months – Provision expense impact also driven by higher outstanding loan balance and increase in coverage ratio Last 12 Month
Slide 15: Auto Finance – Key Metrics
Auto Finance – Key Metrics Consumer Originations Origination Mix ($ billions; % of $ originations) (% of $ originations) $10.8 $11.1 37% 35% 37% 45% 43% 40% $9.3 $9.0 $9.4 $9.3 32% 32% 9% 9% 11% 11% 33% 37% 36% 9% 9% 37% 24% 24% 26% 48% 49% 49% 26% 28% 29% 45% 46% 48% 45% 45% 40% 37% 35% 35% 6% 7% 3
Slide 16: Insurance
Insurance • Pre-tax income of $56 million, up $16 million YoY and Increase/(Decrease) vs. $74 million QoQ Key Financials ($ millions) 3Q 16 2Q 16 3Q 15 Premiums, service revenue earned and other $ 242 $ 1 $ 2 – Higher investment gains YoY Losses and loss adjustment expenses 69 (76) 8 Acquisition and
Slide 17: Mortgage Finance
Mortgage Finance • Pre-tax income of $8 million, up $4 million YoY and Increase/(Decrease) vs. down $1 million QoQ Key Financials ($ millions) 3Q 16 2Q 16 3Q 15 Total net revenue $ 25 $ (1) $ 8 – Higher net financing revenue YoY driven by asset Provision for loan losses 1 1 (2) balance growth from b
Slide 18: Corporate Finance
Corporate Finance • Pre-tax income of $15 million up $1 million YoY and QoQ Increase/(Decrease) vs. Key Financials ($ millions) 3Q 16 2Q 16 3Q 15 – Net financing revenue up YoY driven by continued Net financing revenue $ 30 $ 1 $ 8 strong originations driving asset growth Total other revenue 4 - (6)
Slide 19: Conclusion
Conclusion Ally continues progress on strategic plan and is achieving improved financial results Generating strong EPS growth with a long runway Deposit and customer growth remain important drivers Dedicated to efficient capital deployment and significant common distributions Successfully op
Slide 20: Supplemental Charts
Supplemental Charts
Slide 21: Results by Segment
Supplemental Results by Segment Pre-Tax Income Increase/(Decrease) vs. ($ millions) 3Q 16 2Q 16 3Q 15 2Q 16 3Q 15 Automotive Finance $ 319 $ 426 $ 323 $ (107) $ (4) Insurance 56 (18) 40 74 16 Dealer Financial Services $ 375 $ 408 $ 363 $ (33) $ 12 Mortgage Finance 8 9 4 (1) 4 Corporate Finance 15 14
Slide 22: Funding and Liquidity
Supplemental Funding and Liquidity • Bank funding at 73% up 4% YoY Growth in Bank Funded Assets • Deposits now represent 54% of total funding ($ billions) – Reduced secured debt footprint by 7% YoY $155.9 $158.6 $156.5 $157.9 $157.4 – Unsecured issuance used to refinance preferred stock • $1.5 billi
Slide 23: Corporate and Other
Supplemental Corporate and Other • Corporate and Other includes the impact of centralized Increase/(Decrease) vs. asset and liability management, corporate overhead Key Financials ($ millions) 3Q 16 2Q 16 3Q 15 allocation activities, the legacy mortgage portfolio and Net financing revenue (loss) $ (
Slide 24: Interest Rate Sensitivity
Supplemental Interest Rate Sensitivity Net Financing Revenue Impact(1) vs. Forward Curve 3Q16 2Q16 Ally Modeled 50% Deposit Ally Modeled 50% Deposit $ million Scenario(2) Pass-Through Scenario(2) Pass-Through +100 bp Instantaneous $ 17 $ 133 $ (18) $ 89 +100 bp Gradual (over 12 months) $ 30 $ 73 $ 0
Slide 25: Deferred Tax Asset
Supplemental Deferred Tax Asset Deferred Tax Asset 3Q 16 (1) 2Q 16 (1) ($ millions) Gross DTA/(DTL) Valuation Net DTA/(DTL) Net DTA/(DTL) Balance Allowance Balance Balance Net Operating Loss (Federal) $ 806 $ - $ 806 $ 892 Capital Loss (Federal) 42 (42) - - Tax Credit Carryforwards 1,989 (494) 1,495
Slide 26: 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 U.S. GAAP measures: Adjusted Earnings per Share (
Slide 27: GAAP to Core Results
Supplemental GAAP to Core Results Adjusted Earnings per Share ("Adjusted EPS") QUARTERLY TREND 3Q 16 2Q 16 1Q 16 4Q 15 3Q 15 Numerator ($ millions) GAAP net income available to common shareholders $ 209 $ 345 $ 235 $ (953) $ 230 less: Disc Ops, net of tax 52 (3) (3) 13 5 add back : Original issue di
Slide 28: GAAP to Core Results
Supplemental GAAP to Core Results Adjusted Tangible Book Value per Share ("Adjusted TBVPS") QUARTERLY TREND 3Q 16 2Q 16 1Q 16 4Q 15 3Q 15 Numerator ($ billions) GAAP shareholder's equity $ 13.6 $ 13.6 $ 13.8 $ 13.4 $ 14.6 less: Preferred equity - - (0.7) (0.7) (0.8) GAAP Common shareholder's equity
Slide 29: GAAP to Core Results
Supplemental GAAP to Core Results Core Return on Tangible Common Equity ("Core ROTCE") QUARTERLY TREND 3Q 16 2Q 16 1Q 16 4Q 15 3Q 15 Numerator ($ millions) GAAP net income available to common shareholders $ 209 $ 345 $ 235 $ (953) $ 230 less: Disc Ops, net of tax 52 (3) (3) 13 5 add b ack: Original
Slide 30: GAAP to Core Results
Supplemental GAAP to Core Results Adjusted Efficiency Ratio QUARTERLY TREND 3Q 16 2Q 16 1Q 16 4Q 15 3Q 15 Numerator ($ millions) Total noninterest expense $ 735 $ 773 $ 710 $ 668 $ 674 less: Rep and warrant expense (2) (3) (1) (2) (3) less: Insurance expense 222 293 218 201 209 less: Repositioning i
Slide 31: 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 16 2Q 16 1Q 16 4Q 15 3Q 15 Numerator Common equity tier 1 capital (transition) $ 12.9 $ 12.8 $ 12.7 $ 12.5 $ 13.4 DTAs arising from NOL and tax credit carryforward
Slide 32: Notes on non-GAAP and other financial measures
Supplemental Notes on non-GAAP and other financial measures $ in millions 3Q 16 2Q 16 3Q 15 OID & OID & OID & GAAP Repositioning Non-GAAP (1) GAAP Repositioning Non-GAAP (1) GAAP Repositioning Non-GAAP (1) Items Items Items Consolidated Ally Net financing revenue $ 996 $ 15 $ 1,011 $ 984 $ 14 $ 998