Slide 1: Ally Financial Inc. 3Q Earnings Review
Ally Financial Inc . 3Q Earnings Review November 2, 2011 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 2010 Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K. This information
Slide 3: Third Quarter Highlights
Third Quarter Highlights • Core pre-tax income (1) of $102 million and net loss of $210 million – Impacted by MSR valuation, net of hedge, pre-tax loss of $471 million • Premier Auto Finance Franchise – Maintaining #1 U.S. market share position – Strong U.S. consumer originations increased 6% QoQ an
Slide 4: Results by Segment
Results by Segment • Global Automotive Services continues to post attractive and stable results – Impact from lease remarketing gains normalizing – Strong origination and credit quality trends continue • Mortgage Operations impacted by servicing asset valuation and hedge ineffectiveness Pre-Tax Inco
Slide 5: Mortgage Business Model Update
Mortgage Business Model Update • Evolving landscape creating challenges in the mortgage business model – Highly competitive, low margin business – Servicing costs are rising – MSR implications Basel III capital deductions Size relative to balance sheet and capital Volatility of asset value • Announc
Slide 6: Core Business Fundamentals Continue Positive Trend
Core Business Fundamentals Core Business Fundamentals Continue Positive Trend • Competitively advantaged auto finance franchise • Strong origination growth and asset generation capabilities • High quality assets – low loss, short dated, secured auto loans • Leading direct bank franchise with growing
Slide 7: Auto Finance Category Leader
Auto Finance Category Leader TOTAL MARKET: #1 Auto Finance Provider NEW: Market Leader in New Vehicle Financing Total Market Share New Vehicle Market Share 12.0% 5.2% 10.0% 9.2% 4.3% 8.0% 6.6% 6.4% 3.4% 3.3% 3.3% 5.9% 6.0% 5.5% 4.0% 2.0% 0.0% Ally Toyota Chase Honda Wells Fargo Ally Ford Toyota Hond
Slide 8: Outlook and Priorities
Outlook and Priorities • Challenging environment continues … – Competition in auto finance space – Returns under pressure in near term – Volatile capital markets – Mortgage topics • …We’ll continue to be successful by focusing on expanding our premier auto finance franchise – Leverage competitively
Slide 9: Third Quarter 2011 Results
Third Quarter 2011 Results Increase/(Decrease) vs. ($ millions) 3Q 11 2Q 11 3Q 10 2Q 11 3Q 10 Net financing revenue (ex. OID) $ 815 $ 965 $ 900 $ (150) $ (85) Total other revenue (ex. OID) 601 1,136 1,457 (535) (856) Provision for loan losses 49 51 9 (2) 40 Controllable expenses (1) 766 859 838 (93)
Slide 10: Select Earnings Drivers
Select Earnings Drivers Cost of funds declining as bank assets grow Net income to benefit from lower OID expense ($ billions) ($ billions) 5.3% 5.2% $1.3 4.7% 4.4% 4.2% 4.2% 4.3% 4.2% $1.0 4.1% 3.8% 3.7% $70 $73 $66 $77 $62 $55 $55 $79 $0.3 $52 $0.2 $42 $36 1Q 09 2Q 09 3Q 09 4Q 09 1Q 10 2Q 10 3Q 10
Slide 11: North American Automotive Finance
North American Automotive Finance • North American segment reported pre-tax Key Financials ($ millions) 3Q 11 2Q 11 3Q 10 income of $551 million Net financing revenue $ 755 $ 878 $ 800 Total other revenue 126 114 144 • Net financing revenue decrease of $123 million Total net revenue 881 992 944 Prov
Slide 12: North American Auto Finance – Key Metrics
North American Auto Finance – Key Metrics U.S. Consumer Originations U.S. Origination Mix ($ billions) (% of $ originations) $11.6 17% 23% $10.0 $9.3 $9.5 12% 2% 17% $8.0 $8.3 11% 4% 10% $6.0 12% 9% 27% 19% 22% 15% 1Q 10 2Q 10 3Q 10 4Q 10 1Q 11 2Q 11 3Q 11 1Q 10 2Q 10 3Q 10 4Q 10 1Q 11 2Q 11 3Q 11 G
Slide 13: International Automotive Finance
International Automotive Finance • International Operations earned $82 million of pre-tax Key Financials ($ millions) 3Q 11 2Q 11 3Q 10 income up from $71 million in 2Q Net financing revenue $ 161 $ 176 $ 174 Total other revenue 69 65 76 – Provision expense benefit driven by favorable Total net reve
Slide 14: Insurance
Insurance • Pre-tax income of $114 million, up from $73 Key Financials ($ millions) 3Q 11 2Q 11 3Q 10 million in 2Q Insurance premiums, service revenue earned and other $ 437 $ 445 $ 478 Insurance losses and loss adjustment expenses 183 237 218 – Weather losses improved from 2Q due to Acquisition an
Slide 15: Mortgage Operations – Origination and Servicing
Mortgage Operations – Origination and Servicing • Origination and Servicing pre-tax loss of $311 million Key Financials ($ millions) 3Q 11 2Q 11 3Q 10 Net financing revenue $ (4) $ (18) $ 5 • Results impacted by servicing asset (MSR) mark to Gain on sale of mortgage loans, net 38 62 214 market Other
Slide 16: Mortgage Operations – Legacy Portfolio and Other
Mortgage Operations – Legacy Portfolio and Other • Pre-tax loss of $111 million compared to a loss of Key Financials ($ millions) 3Q 11 2Q 11 3Q 10 $174 million in 2Q Net financing revenue $ 65 $ 78 $ 142 – Primarily driven by lower repurchase Gain on sale of mortgage loans, net 7 34 84 expense in 3
Slide 17: Mortgage Repurchase Reserves
Mortgage Repurchase Reserves • Mortgage repurchase reserve expense of $70 million Mortgage Repurchase Reserves ($ millions) 3Q 10 4Q 10 1Q 11 2Q 11 3Q 11 – Lower repurchase reserve expense relative to 2Q driven by mortgage insurance rescission Beginning reserve balance $ 855 $ 1,128 $ 830 $ 830 $ 82
Slide 18: Ally Bank Franchise Momentum
Ally Bank Franchise Momentum • Market shift to direct banking model continues Direct banking preferred by customers • Ally is already well positioned to benefit Preferred Banking Channel 72% • No legacy burden of branch network overhead and high- 59% turnover staffing models • Number of Ally Bank re
Slide 19: Deposit Growth
Deposit Growth • Continued growth of Ally’s deposit base Stable, consistent growth of retail deposits – Total deposit growth of $2.1 billion in 3Q Ally Financial Deposit Levels ($ billions) – Driven by $1.7 billion of retail deposit growth at Ally $50.0 $44.3 Bank $40.7 $42.3 $38.0 $39.0 $40.0 • Pos
Slide 20: Liquidity
Liquidity • Proactive liquidity management in 2010 and 2011 built robust liquidity position to address maturities and allows for ample funding of core businesses – Liquidity cushion relative to unsecured bond maturities improved in 3Q – $26 billion of parent company liquidity (1) and additional $14
Slide 21: Funding Highlights
Funding Highlights • New funding transactions of $12.4 billion in 3Q and over $31 billion 3Q11 YTD • Ally utilizes a diverse funding strategy across markets and asset classes – Raised $5.4 billion in the U.S. public and private term securitization markets in 3Q – $5.5 billion of new revolving bank c
Slide 22: Capital
Capital • Capital ratios remain robust versus the risk profile of assets and versus industry peers – Directive to maintain 15% Total Risk Based Capital expires 12/31/11 • Ally is well positioned to achieve the enhanced Basel III capital requirements in advance of the proposed timelines – Estimated 3
Slide 23: Asset Quality
Asset Quality Net charge -offs declined 70% YoY 3.3x reserve coverage of net charge -offs Consolidated Asset Quality Trends Allowance Balance as % of NCOs $ millions $109,779 $ millions 1 $107,871 358.0% $106,488 1 329.3% 1.45% 1 $101,398 1 239.1% 0.97% 0 194.8% $95,770 153.8% 0.73% 0 0 0.45% 0.45%
Slide 24: ResCap Contingent Exposures
ResCap Contingent Exposures • Ally’s mortgage servicing business and legacy originations have been conducted out of ResCap, LLC • ResCap remains a separate legal entity from Ally with its own independent board • ResCap continues to face challenges relating to legacy contingent liabilities • Signific
Slide 25: Conclusion
Conclusion • Challenging operating environment • Core fundamentals continue positive trends • Mortgage issues are a ‘cloud’ that are being addressed • Focus on continued expansion of auto finance platform • Ally Bank deposit franchise well positioned for continued growth • Conservative capital and l
Slide 26: Supplemental Charts
Supplemental Charts
Slide 27: Supplemental Corporate and Other
Supplemental Corporate and Other • OID amortization expense of $225 million in 3Q Key Financials ($ millions) 3Q 11 2Q 11 3Q 10 Net financing loss $ (186) $ (172) $ (243) • Commercial Finance pre-tax income of $24 Total other revenue 40 127 34 million in 3Q, down from $82 million in 2Q Total net los
Slide 28: Supplemental Liquidity and Unsecured Debt Maturity Profile
Supplemental Liquidity and Unsecured Debt Maturity Profile Available Liquidity 9/30/2011 6/30/2011 ($ billions) Parent (1) Ally Bank Parent (1) Ally Bank Cash and Cash Equivalents $ 10.1 $ 4.5 $ 9.5 $ 3.6 Unencumbered Securities (2) 0.4 5.2 0.9 5.8 Current Committed Unused Capacity (3) 13.2 6.1 12.0
Slide 29: Supplemental Notes on non-GAAP and other financial measures
Supplemental Notes on non -GAAP and other financial measures (1) Core pre-tax income is a non-GAAP financial measure . It is defined as income from continuing operations before taxes and primarily bond exchange original issue discount ("OID") amortization expense . (2) Controllable expenses includes