Ally Financial Inc. · NYSE:ALLY
Ally Financial — Q3 2014 Earnings Presentation
24 slides from Ally Financial's earnings presentation, Oct 29, 2014
Slide 1: Ally Financial Inc. 3Q Earnings Review
Ally Financial Inc. 3Q Earnings Review October 29, 2014 Contact Ally Investor Relations at (866) 710-4623 or [email protected]
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: Third Quarter Highlights
Third Quarter Highlights • Net income of $423 million and EPS of $0.74 – Core pretax income(1) of $467 million, and Adjusted EPS(2) of $0.53 – Core ROTCE(3) of 9.1%, up from 5.4% in 3Q13 • Auto originations of $11.8 billion, up from $9.6 billion in 3Q13 – Strong performance across all dealer channel
Slide 4: Third Quarter Financial Results
Third Quarter Financial Results Increase/(Decrease) vs. ($ millions except per share data) 3Q 14 2Q 14 3Q 13 2Q 14 3Q 13 (1) Net financing revenue $ 936 $ 912 $ 801 $ 24 $ 135 (1) Total other revenue 375 372 367 3 8 Provision for loan losses 102 63 141 39 (39) Total noninterest expense 742 805 756 (
Slide 5: Results by Segment
Results by Segment • Auto Finance results higher YoY driven by portfolio growth and lower provision expense – Lower QoQ driven primarily by lower net lease revenue and seasonally higher credit losses as expected • Insurance results driven primarily by weather-related losses, which were up YoY but se
Slide 6: Net Interest Margin
Net Interest Margin • Net Interest Margin(1) improved 31 bps YoY and 2 bps QoQ – Cost of funds(1) declined 50 bps YoY driven primarily by the redemption of legacy high-cost callable debt and continued growth in deposits $30 million of accelerated interest expense in 2Q from zero coupon bond redemp
Slide 7: Liability Management
Liability Management • Significant progress in bringing down high-cost unsecured debt levels – Opportunity to further reduce debt levels and funding costs through liability management and debt maturities LT Unsecured Debt 12/31/12 9/30/14 $ millions Outstanding Matured Called Issued FX Outstanding L
Slide 8: Ally Bank Deposit Franchise
Ally Bank Deposit Franchise • Continued franchise momentum with nearly $47 Stable, consistent growth of retail deposits billion of retail deposits Ally Bank Deposit Levels • $0.8 billion of retail deposit growth QoQ, with ($ billions) balances up 12% YoY $52.8 $54.9 $55.6 $56.4 $51.4 – Growth contin
Slide 9: Expenses
Expenses • Controllable expenses down $19 million YoY and $128 million YTD – QoQ increase driven by higher compensation and benefit expense as a result of the equity compensation revaluation in 2Q • Other noninterest expense down QoQ driven by seasonally lower weather-related insurance losses Increa
Slide 10: Capital
Capital • Tier 1 Common capital increased in the quarter driven primarily by $356 million of net income available to common • Tier 1 Common ratio of 9.7%, up 177 bps YoY and 30 bps QoQ – Estimated fully phased-in Basel III Common Equity Tier 1 ratio of 9.8% Ally Financial Capital 16.4% 15.4% 13.5% 1
Slide 11: Asset Quality
Asset Quality Consolidated Net Charge-Offs U.S. Commercial Auto Net Charge-Offs 0.60% 0.53% 0.53% 0.53% 344% 287% 0.03% 238% 234% 0.42% 224% 187% 0.34% 0.01% 0.00% $2 0.00% 0.00% -0.01% $0 $0 $1 $0 ($1) 2Q 13 3Q 13 4Q 13 1Q 14 2Q 14 3Q 14 ALLL as % of Annualized NCOs Annualized NCO Rate 2Q 13 3Q 13
Slide 12: Auto Finance – Results
Auto Finance – Results • Auto Finance reported pre-tax income of $415 million Increase/(Decrease) vs. in 3Q, up $76 million YoY and down $46 million from Key Financials ($ millions) 3Q 14 2Q 14 3Q 13 the prior quarter Net financing revenue $ 850 $ (34) $ 50 Total other revenue 69 7 4 – Net financing
Slide 13: Auto Finance – Key Metrics
Auto Finance – Key Metrics Consumer Originations Origination Mix ($ billions; % of $ originations) (% of $ originations) $11.8 $10.9 $9.8 $9.6 20% 27% 28% 27% $9.2 20% 15% 16% $8.2 19% 16% 18% 17% 26% 21% 15% 30% 29% 15% 16% 6% 8% 8% 63% 63% 24% 64% 69% 66% 26% 27% 66% 11% 8% 15% 2Q 13 3Q 13 4Q 13 1
Slide 14: Insurance
Insurance • Pre-tax income of $60 million, down $23 million YoY Increase/(Decrease) vs. and up $83 million from the prior quarter Key Financials ($ millions) 3Q 14 2Q 14 3Q 13 Insurance premiums, service revenue earned and other $ 250 $ (2) $ (4) – Seasonal decrease in weather-related losses QoQ Ins
Slide 15: 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) 3Q14 2Q14 3Q13 Key Financials ($ millions) 3Q 14 2Q 14 3Q 13 Net financing revenue (ex. OID) $ 61 $ 61 $ 89 Net financing revenue $ 9 $ (3) $ (4) T
Slide 16: Summary and Outlook
Summary and Outlook • Strong operating performance in the core businesses – $11.8 billion of auto originations – Growth channel originations up 54% YoY – Retail deposits up 12% YoY • Financial performance ahead of expectations with further long-term improvement targeted – Three-point plan on track t
Slide 17: Supplemental Charts
Supplemental Charts
Slide 18: Third Quarter Financial Results
Supplemental Third Quarter Financial Results Increase/(Decrease) vs. ($ millions) 3Q 14 2Q 14 3Q 13 2Q 14 3Q 13 Net financing revenue (1) $ 936 $ 912 $ 801 $ 24 $ 135 Total other revenue (1) 375 372 367 3 8 Provision for loan losses 102 63 141 39 (39) (2) Controllable expenses 469 458 488 11 (19) Ot
Slide 19: Funding
Supplemental Funding • Diversified funding strategy with opportunities to lower cost of funds Total Asset Breakdown – 68% of total assets reside at Ally Bank ($ billions) $150.6 $151.2 $148.5 $149.9 $149.2 – Deposits now represent 44% of Ally’s funding • Efficient capital markets funding in 3Q – Com
Slide 20: Liquidity
Supplemental Liquidity • Consolidated available liquidity of $18.9 billion – $11.4 billion at the parent and $7.5 billion at Ally Bank Available Liquidity 9/30/2014 6/30/2014 9/30/2013 (1) (1) (1) ($ b illions) Parent Ally Bank Parent Ally Bank Parent Ally Bank Cash and Cash Equivalents $ 2.9 $ 2.2
Slide 21: Discontinued Operations
Supplemental Discontinued Operations • Sale of stake in China joint-venture expected to generate an approximate $0.4 billion gain upon sale Impact of Discontinued Operations Increase/(Decrease) vs. ($ millions) 3Q 14 2Q 14 3Q 13 Auto Finance $ 29 $ 7 $ (31) Insurance 6 5 1 Corporate and Other (1) 16
Slide 22: Deferred Tax Asset
Supplemental Deferred Tax Asset • DTA utilization resulted in approximately $12 million of cash taxes paid YTD Deferred Tax Asset (1) 3Q14 2Q14 ($ millions) Gross DTA/(DTL) Valuation Net DTA/(DTL) Net DTA/(DTL) Balance Allowance Balance Balance Net Operating Loss (Federal) $ 798 $ - $ 798 $ 885 Capi
Slide 23: Notes on non-GAAP and other financial measures
Supplemental Notes on non-GAAP and other financial measures $ in millions 3Q 14 2Q 14 3Q 13 OID & OID & OID & GAAP Repositioning Non-GAAP (1) GAAP Repositioning Non-GAAP (1) GAAP Repositioning Non-GAAP (1) Items Items Items Consolidated Results Net financing revenue $ 889 $ 47 $ 936 $ 866 $ 46 $ 912
Slide 24: 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