Slide 1: Ally Financial Inc. 4Q 2015 Earnings Review
Ally Financial Inc. 4Q 2015 Earnings Review February 2, 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: 2015 Highlights
2015 Highlights Strong fundamentals and momentum in 2015 Adjusted EPS of $2.00 in 2015, up 19% from the prior year (1) Achieved sustainable 9% – 11% Core ROTCE (2) Achieved mid-40% Adjusted Efficiency Ratio driving positive operating leverage (1) Exceeded auto origination target with $41 bil
Slide 4: Successful Execution of IPO Plan
Successful Execution of IPO Plan 175bps -175bps 1) Normalized capital 1) Normalized investment structure (Series A/G) gains 2) Leveraged Ally Bank 2) Declining lease portfolio funding platform (CF, 275bps 620-660 Auto Assets) 3) Other 1) Streamlined operational headcount Regulatory 2) Insourced nume
Slide 5: Financial Momentum
Financial Momentum Adjusted Earnings Per Share(1) Core ROTCE (2) $2.00 9.4% $1.68 7.9% 3.1% -$0.14 2013 2014 2015 2013 2014 2015 (1) Represents a non-GAAP financial measure. See slide 10 for details (2) Represents a non-GAAP financial measure. Core ROTCE adjusts for certain items such as net DTA and
Slide 6: Operational Momentum
Operational Momentum • Growth channel originations up 53% YoY • Fully replaced lost retail subvention and lease volume • Application flow up 17% YoY Auto • Expanded active dealer network 5% in 2015 to over 17,500 dealers Finance • Established financing relationships with Mitsubishi, Aston Martin, Mc
Slide 7: Diversified and Adaptable Business
Diversified and Adaptable Business • Ally’s Auto Finance business successfully adapted to Diversified Origination Channels loss of subvented lease and loans Originations by Channel • Opportunities to expand in Growth Channel (non GM/Chrysler) $41.0 $41.0 %∆ YoY $3.4 $13.3 • Success in growing used l
Slide 8: Differentiated Auto Lending Model
Differentiated Auto Lending Model • Differentiated market approach High Quality Risk Profile − Focus on premium service and deep relationships Prim e / Non Prim e Distribution - Retail Loan Originations − Value added, innovative products and services for dealers, OEMs and consumers − Full credit spe
Slide 9: Positioned for Continued Success
Positioned for Continued Success • Overall environment continues to be strong Vehicles in Operation − Healthy manufacturers and dealer networks (# millions of vehicles in operation) − Healthy consumer (employment, gas prices and 249.6 252.7 257.9 249.5 248.8 249.0 affordable payments) 39% 42% 47% •
Slide 10: Fourth Quarter and Full Year Financial Results
Fourth Quarter and Full Year Financial Results ($ millions except per share data) 4Q 15 3Q 15 4Q 14 FY 2015 FY 2014 Net financing revenue (1) $ 995 $ 981 $ 835 $ 3,764 $ 3,547 Total other revenue (1)(2) 358 332 370 1,498 1,438 Provision for loan losses 240 211 155 707 457 (2) Controllable expenses 4
Slide 11: Results by Segment
Results by Segment • Auto Finance results driven by continued strong originations – Higher net financing revenue due to retail loan growth and lower cost of funds – Partially offset by higher provision expense due to portfolio growth and seasonality • Insurance results largely driven by higher inves
Slide 12: Net Interest Margin
Net Interest Margin • Net Interest Margin(1) up 33 bps YoY driven by higher asset yields and lower cost of funds – Cost of funds(1) down 20 bps YoY driven by reduction of legacy high-coupon debt and continued deposit growth Net Interest Margin ($ millions) 4Q15 3Q15 4Q14 Average Average Average Bala
Slide 13: Deposits
Deposits • $1.9 billion of retail deposit growth QoQ and $7.5 billion YoY Stable, consistent growth of retail deposits • Primary customer base up 16% YoY Ally Bank Deposit Levels ($ billions) $66.2 • Enhancing customer centric banking experience $57.8 $60.5 $61.6 $63.7 $10.7 $10.2 $9.9 $9.9 $9.9 – E
Slide 14: Capital
Capital • Capital ratios lower QoQ driven by redemption of Capital Ratios and Risk-Weighted Assets the remaining Series G preferred − Partially offset by profitability in the quarter 14.0% 13.2% 12.9% 13.0% 12.6% 12.5% 12.5% 11.9% • Preliminary fully phased-in Basel III Common 10.4% 11.7% 11.1% 9.6%
Slide 15: Asset Quality
Asset Quality Consolidated Net Charge-Offs Provision Expense 0.72% ($ millions) 0.68% 0.60% 0.61% 0.61% Provision Expense 1Q 14 2Q 14 3Q 14 4Q 14 1Q 15 2Q 15 3Q 15 4Q 15 0.53% Retail Auto $ 163 $ 97 $ 112 $ 168 $ 158 $ 152 $ 200 $ 229 0.39% Commercial Auto (4) 2 (3) 7 (31) (20) 1 7 0.34% Mortgage (2
Slide 16: Auto Finance – Results
Auto Finance – Results • Auto Finance reported pre-tax income of $333 million Increase/(Decrease) vs. in 4Q, up $42 million YoY and up $10 million from the Key Financials ($ millions) 4Q 15 3Q 15 4Q 14 prior quarter Net financing revenue $ 900 $ 30 $ 133 Total other revenue 65 2 (4) – Net financing
Slide 17: Auto Finance – Key Metrics
Auto Finance – Key Metrics Consumer Originations Origination Mix ($ billions; % of $ originations) (% of $ originations) $11.8 $10.8 $11.1 27% 30% 20% $9.8 36% 37% 35% 37% $9.0 $9.3 32% 32% 16% 22% 28% 26% 9% 33% 27% 17% 9% 11% 18% 20% 24% 24% 12% 12% 8% 10% 13% 26% 8% 63% 25% 36% 37% 60% 52% 45% 45
Slide 18: Insurance
Insurance • Pre-tax income of $78 million, down $8 million YoY and up $38 million from the prior quarter Increase/(Decrease) vs. Key Financials ($ millions) 4Q 15 3Q 15 4Q 14 – Lower non-weather losses due to lower Vehicle Premiums, service revenue earned and other $ 238 $ (2) $ (7) Losses and loss
Slide 19: Mortgage and Corporate and Other
Mortgage and Corporate and Other Mortgage Results Corporate and Other Results Increase/(Decrease) vs. Increase/(Decrease) vs. Key Financials ($ millions) 4Q 15 3Q 15 4Q 14 Key Financials ($ millions) 4Q 15 3Q 15 4Q 14 Net financing revenue (ex. OID) $ 58 $ (17) $ 7 Net financing revenue $ 22 $ 2 $ 1
Slide 20: Conclusion and Outlook
Conclusion and Outlook • Successfully executed two year plan to restore profitability and returns • Positioned Ally to provide reliable results with a long runway for steady growth – Near-term EPS growth driven by significantly lower preferred dividends and modest business expansion – Proven ability
Slide 21: Supplemental Charts
Supplemental Charts
Slide 22: Fourth Quarter and Full Year Financial Results
Supplemental Fourth Quarter and Full Year Financial Results ($ millions) 4Q 15 3Q 15 4Q 14 FY 2015 FY 2014 Net financing revenue (1) $ 995 $ 981 $ 835 $ 3,764 $ 3,547 Total other revenue (1)(2) 358 332 370 1,498 1,438 Provision for loan losses 240 211 155 707 457 (2) Controllable expenses 465 449 47
Slide 23: Full Year Results by Segment
Supplemental Full Year Results by Segment Pre-Tax Income Increase/(Decrease) vs. ($ millions) 2015 2014 2014 Automotive Finance $ 1,335 $ 1,429 $ (94) Insurance 211 197 14 Dealer Financial Services $ 1,546 $ 1,626 $ (80) Mortgage (1) 91 57 34 (1) Corporate and Other 164 (64) 228 Core pre-tax income,
Slide 24: Funding
Supplemental Funding • Diversified funding strategy with opportunities to Total Asset Breakdown lower cost of funds ($ billions) – 70% of total assets reside at Ally Bank $151.6 $153.3 $156.3 $155.9 $158.6 – Deposits represent 47% of Ally’s funding • $1.0 billion of ABS transactions in 4Q 69% 68% 68
Slide 25: Interest Rate Sensitivity
Supplemental Interest Rate Sensitivity Net Financing Revenue Impact(1) vs. Forward Curve 4Q15 3Q15 Ally Modeled 50% Deposit Ally Modeled 50% Deposit $ million Scenario(2) Pass-Through Scenario(2) Pass-Through +100 bp Instantaneous $ (109) $ 13 $ (50) $ 48 +100 bp Gradual (over 12 months) $ (37) $ 4
Slide 26: Deferred Tax Asset
Supplemental Deferred Tax Asset Deferred Tax Asset 4Q 15 3Q 15 (1) ($ millions) Gross DTA/(DTL) Valuation Net DTA/(DTL) Net DTA/(DTL) Balance Allowance Balance Balance Net Operating Loss (Federal) $ 950 $ - $ 950 $ 697 Tax Credit Carryforwards 1,941 (472) 1,469 1,461 State/Local Tax Carryforwards 19
Slide 27: Notes on non-GAAP and other financial measures
Supplemental Notes on non-GAAP and other financial measures $ in millions 4Q '15 3Q '15 4Q '14 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 $ 983 $ 12 $ 995 $ 970 $ 11 $ 981
Slide 28: Notes on non-GAAP and other financial measures
Supplemental Notes on non-GAAP and other financial measures $ in millions FY '15 FY '14 OID & OID & GAAP Repositioning Non-GAAP (1) GAAP Repositioning Non-GAAP (1) Items Items Consolidated Ally Net financing revenue $ 3,719 $ 45 $ 3,764 $ 3,375 $ 172 $ 3,547 Total other revenue 1,142 356 1,498 1,276
Slide 29: Notes on non-GAAP and other financial measures
Supplemental Notes on non-GAAP and other financial measures 1) Core pre-tax income (loss) is a non-GAAP financial measure. It is defined as income (loss) from continuing operations before income tax expense and primarily bond exchange original issue discount ("OID") amortization expense. 2) Repositi