Ally Financial Inc. · NYSE:ALLY
Ally Financial — Q2 2020 Earnings Presentation
35 slides from Ally Financial's earnings presentation, Jul 17, 2020
Slide 1: Ally Financial Inc. 2Q 2020 Earnings Review
Ally Financial Inc. 2Q 2020 Earnings Review July 17, 2020 2Q 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: Quarterly
GAAP and Core Results: Quarterly ($ millions except per share data) 2Q 20 1Q 20 4Q 19 3Q 19 2Q 19 GAAP net income (loss) attributable to common shareholders (NIAC) $ 241 $ (319) $ 378 $ 381 $ 582 (1)(2) Core net income (loss) attributable to common shareholders $ 228 $ (166) $ 364 $ 396 $ 387 GAAP e
Slide 4: 2Q 2020 Highlights
2Q 2020 Highlights Consistent prioritization of our employees, our customers and our communities > Adjusted EPS(1) of $0.61 | Core ROTCE(1) of 7.6% ▪ Adjusted total net revenue(1) of $1.53 billion compared to $1.56 billion in 2Q 2019 > Auto & Insurance trends improved throughout 2Q | Reinforces adap
Slide 5: Core Metric Trends
Core Metric Trends Adjusted Earnings Per Share(1) Adjusted Total Net Revenue(2) ($ millions) $0.97 $1.01 $0.95 $1,620 $1,622 $1,606 $0.91 $0.92 $0.83 $0.80 $1,556 $1,557 $1,521 $1,535 $1,528 $0.70 $0.68 $1,492 $424 $458 $0.65 $1,472 $1,480 $1,463 $1,471 $451 $0.58 $0.61 $393 $393 $392 $396 $381 $379
Slide 6: Recent Trends: Auto
Recent Trends: Auto Consumer Auto: Decisioned Applications Consumer Auto: Originations New Apps: YoY change Used Apps: YoY change YoY Ally Consumer Originations 25% 25% 10% 10% (5%) (5%) (20%) (20%) (35%) (35%) (50%) (50%) Dec '19 Jan '20 Feb '20 Mar '20 Apr '20 May '20 Jun '20 Dec'19 Jan'20 Feb'20
Slide 7: Recent Trends: Deposit & Consumer Offerings
Recent Trends: Deposit & Consumer Offerings Retail Deposit Growth Retail Deposit Customers ($ billions) (# thousands) $4.0 2,133 $3.0 $2.0 1Q $1.0 2020 1,966 $0.0 Apr'20 May'20 Jun'20 Dec'19 Jan'20 Feb'20 Mar'20 Apr'20 May'20 Jun'20 Ally Home Ally Invest ($ millions) Direct-to-Consumer Originations
Slide 8: Strong Balance Sheet Foundation
Strong Balance Sheet Foundation Funding Liquidity (1) ($ billions) Deposits Secured FHLB / Other Unsecured Debt (ex. Core OID) (2) Highly Liquid Securities Cash & Equivalents Unused Capacity 13% 10% 8% 7% $43.5 16% 10% 11% 14% 13% 4% $1.6 8% 7% 17% 12% 24% $26.3 $18.6 $21.0 $19.7 $1.6 $17.6 $3.2 72%
Slide 9: 2Q 2020 Financial Results
2Q 2020 Financial Results ($ millions; except per share data) Increase / (Decrease) vs. 2Q 20 1Q 20 2Q 19 1Q 20 2Q 19 (1) Net financing revenue (excluding Core OID) $ 1,063 $ 1,154 $ 1,164 $ (92) $ (101) Core OID (9) (8) (7) (0) (2) Net financing revenue (as reported) $ 1,054 $ 1,146 $ 1,157 $ (92)
Slide 10: Balance Sheet & Net Interest Margin
Balance Sheet & Net Interest Margin ($ millions) 2Q 20 1Q 20 2Q 19 Average Average Average Balance Yield Balance Yield Balance Yield Retail Auto Loan $ 72,262 6.48% $ 72,550 6.54% $ 72,274 6.58% Retail Auto Loan (excl. hedge impact) 6.77% 6.66% 6.57% Auto Lease (net of depreciation) 9,068 4.10% 9,07
Slide 11: Deposits
Deposits • Deposits of $131.0 billion, up $14.7 billion or 13% YoY Retail Deposit Balances – Retail deposits of $115.8 billion, up $9.7 billion QoQ ($ billions, EoP) Retail Brokered / Other Customer Retention Rate – IRS tax payment deadline extended to July 15; shifting typical 2Q payments to 3Q $13
Slide 12: Capital Ratios & Shareholder Distributions
Capital Ratios & Shareholder Distributions • Preliminary 2Q 2020 CET1 ratio of 10.1% Capital Ratios and Risk-Weighted Assets – Reflects strong overall capital position and earnings growth along with lower commercial floorplan balances 13.8% and suspension of share repurchase program 12.7% 12.8% 12.8
Slide 13: Asset Quality: Key Metrics
Asset Quality: Key Metrics Consolidated Net Charge-Offs Net Charge-Off Activity Allowance as % of Annualized NCOs Annualized NCO Rate ($ millions) Net Charge-Offs 2Q 19 3Q 19 4Q 19 1Q 20 2Q 20 0.91% Retail Auto $ 172 $ 253 $ 271 $ 262 $ 137 0.85% 0.83% 0.84% 0.75% 0.73% Commercial Auto 1 1 10 2 1 0.
Slide 14: Asset Quality: Coverage & Reserves
Asset Quality: Coverage & Reserves • Maintaining expectation for FY 2020 retail auto NCO’s between 1.8 – 2.1% Consolidated Coverage Ratio Retail Auto Coverage Ratio ($ billions) Reserve - $ Reserve - % ($ billions) Reserve - $ Reserve - % 4.09% 2.85% 3.91% 2.54% 3.34% 2.03% 0.99% 0.99% 0.99% $2.8 $3
Slide 15: Auto: Deferral & COVID-19 Relief
Auto: Deferral & COVID-19 Relief Auto Deferral Program Trends Auto Deferral Scheduled Expirations Data shown in 000’s Maturity by month -- % of Total Auto Deferrals Processed Weekly Deferrals Cumulative Deferrals 500 1,400 100% 1,200 4% 400 80% 32% 1,000 300 800 60% 200 600 34% 40% 400 100 20% 18% 2
Slide 16: Auto Finance
Auto Finance • Pre-tax income of $329 million, down $130 million Increase/(Decrease) vs. YoY and up $502 million QoQ Key Financials ($ millions) 2Q 20 1Q 20 2Q 19 Net financing revenue $ 989 $ (51) $ (33) – Net financing revenue down YoY and QoQ due to lower Total other revenue 40 (7) (21) floorplan
Slide 17: Auto Finance Key Metrics
Auto Finance Key Metrics Consumer Originations Consumer Origination Mix ($ billions; % of $ originations) (% of $ originations) 688 685 688 691 686 685 $9.7 $9.3 49% $9.2 $9.1 56% 54% 50% 55% $8.1 60% $7.2 49% 50% 46% 44% 50% 11% 14% 14% 50% 10% 13% 12% 25% 25% 28% 29% 26% 34% 35% 36% 37% 28% 28% 32
Slide 18: Insurance
Insurance • Pre-tax income of $128 million, up $128 million YoY Increase/(Decrease) vs. and up $233 million QoQ Key Financials ($ millions) 2Q 20 1Q 20 2Q 19 Premiums, service revenue earned and other $ 266 $ (13) $ 3 – Results positively impacted by realized and unrealized Losses and loss adjustmen
Slide 19: Corporate Finance
Corporate Finance • Pre-tax income of $32 million, down $14 million YoY and up $100 million QoQ Increase/(Decrease) vs. Key Financials ($ millions) 2Q 20 1Q 20 2Q 19 • Core pre-tax income(1) of $31 million, down $16 million Net financing revenue $ 77 $ 9 $ 16 YoY and up $95 million QoQ Adjusted tota
Slide 20: Mortgage Finance
Mortgage Finance • Pre-tax income of $8 million, down $6 million YoY and down $4 million QoQ Increase/(Decrease) vs. Key Financials ($ millions) 2Q 20 1Q 20 2Q 19 – Net financing revenue declined YoY and QoQ due to Net financing revenue $ 30 $ (8) $ (16) elevated prepayment activity Total other reve
Slide 21: Conclusion
Conclusion Relentless Customer Focus and ‘Do It Right’ Culture Ongoing optimization of market leading Auto Lending and Insurance business lines Consumer & Commercial Sustained momentum in customer growth and Savings & Insurance deposit funding profile optimization Checking Enhance and grow consumer
Slide 22: Supplemental
Supplemental 2Q 2020 Preliminary Results 22
Slide 23: Results by Segment
Supplemental Results by Segment Pre-Tax Income / (Loss) ($ millions) 2Q 20 1Q 20 2Q 19 Automotive Finance $ 329 $ (173) $ 459 Insurance 128 (105) - Dealer Financial Services $ 457 $ (278) $ 459 Corporate Finance 32 (68) 46 Mortgage Finance 8 12 14 Corporate and Other (160) (77) (25) Pre-tax income /
Slide 24: Funding
Supplemental Funding • Ally’s deposit portfolio growth has consistently Ally Financial Ratings Details reduced reliance on wholesale funding markets LT Debt ST Debt Outlook Date • Ally has access to numerous funding sources, and Fitch BBB- F3 Negative Watch 4/29/2020 is committed to maintaining acce
Slide 25: 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) 2Q 20 1Q 20 2Q 19 corporate overhead allocation activities, the Net financing (loss) $ (54) $ (40) $ (67) Total other revenue
Slide 26: Interest Rate Sensitivity
Supplemental Interest Rate Sensitivity (1) Net Financing Revenue Impacts : Baseline vs. Forward Curve 2Q 20 1Q 20 (2) (2) ($ millions) Gradual Instantaneous Gradual Instantaneous (3) -100 bps $ (26) $ (52) $ (38) $ (69) +100 bps $ 66 $ 98 $ 70 $ 133 Stable rate environment n/m $ (3) n/m $ 25 (1) Net
Slide 27: Deferred Tax Asset & Effective Tax Rate
Supplemental Deferred Tax Asset & Effective Tax Rate (1) (1) Deferred Tax Asset / (Liability) 2Q 20 1Q 20 ($ 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 1,707 (751) 956 880 Sta
Slide 28: 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 29: 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 30: GAAP to Core Results: Adjusted EPS - Quarterly
Supplemental GAAP to Core Results: Adjusted EPS - Quarterly Adjusted Earnings per Share ("Adjusted EPS") QUARTERLY TREND 2Q 20 1Q 20 4Q 19 3Q 19 2Q 19 1Q 19 4Q 18 3Q 18 2Q 18 1Q 18 4Q 17 3Q 17 2Q 17 Numerator ($ millions) GAAP net income (loss) attributable to common shareholders $ 241 $ (319) $ 378
Slide 31: 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 2Q 20 1Q 20 4Q 19 3Q 19 2Q 19 1Q 19 4Q 18 3Q 18 2Q 18 1Q 18 4Q 17 3Q 17 2Q 17 Numerator ($ billions) GAAP common shareholder's equity $ 13.8 $ 13.5 $ 14.4 $ 14.5 $
Slide 32: 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 2Q 20 1Q 20 4Q 19 3Q 19 2Q 19 Numerator ($ millions) GAAP net income (loss) attributable to common shareholders $ 241 $ (319) $ 378 $ 381 $ 582 Discontinued operations, net
Slide 33: GAAP to Core Results: Adjusted Efficiency Ratio - Quarterly
Supplemental GAAP to Core Results: Adjusted Efficiency Ratio - Quarterly Adjusted Efficiency Ratio QUARTERLY TREND 2Q 20 1Q 20 4Q 19 3Q 19 2Q 19 Numerator ($ millions) GAAP noninterest expense $ 985 $ 920 $ 880 $ 838 $ 881 Rep and warrant expense - - - (0) (0) Insurance expense (322) (256) (238) (24
Slide 34: Notes on Non-GAAP and Other Financial Measures
Supplemental Notes on Non-GAAP and Other Financial Measures ($ millions) 2Q 20 1Q 20 2Q 19 Change in the Change in the Change in the fair value of Repositioning fair value of Repositioning fair value of Repositioning GAAP Core OID Non-GAAP (1) GAAP Core OID Non-GAAP (1) GAAP Core OID Non-GAAP (1) eq
Slide 35: 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) 2Q 20 1Q 20 4Q 19 3Q 19 2Q 19 1Q 19 4Q 18 3Q 18 2Q 18 1Q 18 4Q 17 3Q 17 2Q 17 GAAP Net Financing Revenue $ 1,054 $ 1,146 $ 1,156 $ 1,188 $ 1,157 $ 1,132 $ 1,140 $ 1,107 $ 1,0