Ally Financial Inc. · NYSE:ALLY
Ally Financial — Gmac — Q1 2007 Earnings Presentation
30 slides from Ally Financial's earnings presentation, May 2, 2007
Slide 1: Preliminary 2007 First Quarter Earnings
Preliminary 2007 First Quarter Earnings May 2, 2007 3:30 p.m. ET Contact GMAC Investor Relations at (866) 710-4623 or [email protected]
Slide 2: Forward Looking Statements
Forward Looking Statements In the presentation that follows and related comments by GMAC LLC ("GMAC") management, the use of the words "expect," "anticipate," "estimate," "forecast," "initiative," "objective," "plan," "goal," "project," "outlook," "priorities," "target," "intend," "evaluate," "pursu
Slide 3: 2007 First Quarter Performance Highlights
2007 - First Quarter Performance Highlights 1Q 2007 net loss of ($305) million compared to net income of $495 million for 1Q 2006 Pressures in the U.S. residential mortgage market remained high throughout the quarter Slowing home price appreciation has impacted valuations Nonprime credit has weakene
Slide 4: First Quarter Net Income
First Quarter Net Income 4 * 1Q 2007 includes 21% ownership of our former Commercial Mortgage unit; 1Q 2006 includes 100% ownership through March 23, 2006, sale date and 21% ownership thereafter
Slide 5: First Quarter Pre-Tax Income
First Quarter Pre-Tax Income 5 * 1Q 2007 includes 21% ownership of our former Commercial Mortgage unit; 1Q 2006 includes 100% ownership through March 23, 2006, sale date and 21% ownership thereafter A number of GMAC's U.S. entities converted to limited liability companies (LLC) in conjunction with t
Slide 6: ResCap - 1Q 2007 Key Metrics
Moving (Securitization/Sales) Storage (HFI/Servicing) Warehouse Lending (Lending Receivables) Business Capital (Lending Receivables) International ResCap - 1Q 2007 Key Metrics 6 Reduced liquidity for higher risk loans Credit pressure remains as nonprime portfolio runs-off Increased provisions for no
Slide 7: ResCap - Nonprime Loan Risk
2002 2003 Fixed Income 23 77 2002 2003 Fixed Income 73 27 Warehouse Lending Receivables Total: $6.5B ResCap - Nonprime Loan Risk Relative nonprime loan exposure varies on balance sheet as does its risk 2002 2003 Fixed Income 18 82 Loan Servicing Portfolio Total: $452.9B Nonprime Prime 2002 2003 Fixe
Slide 8: ResCap - Sales of HFS Portfolio
ResCap - Sales of HFS Portfolio Total 1Q sales were $29.9 billion Strong securitization activity despite challenging conditions Does not include net interest margin securities, resecuritizations, private issuance or whole loan sales. Source: www.gmacrfc.com and www.gmacmbond.com. Other - includes th
Slide 9: ResCap - U.S. HFI Nonprime Portfolio
ResCap - U.S. HFI Nonprime Portfolio HFI Runoff 2002 -416357155 2003 -631511911 2004 -1019671821 2005 -1439258887 2006 -895122000 U.S. Nonprime HFI Reduction In 1Q 07 Totaled $4.5 billion 9 U.S. nonprime HFI portfolio decreased $4.5 billion to $45.0 billion at 03/31/07 2005 and 2006 vintages represe
Slide 10: ResCap - Held for Investment Portfolio - Credit Quality
1Q '05 2Q '05 3Q '05 4Q '05 1Q '06 2Q '06 3Q '06 4Q '06 1Q '07 0.0017 0.0021 0.0019 0.0012 0.0016 0.002 0.0025 0.0033 0.0033 1Q '05 2Q '05 3Q '05 4Q '05 1Q '06 2Q '06 3Q '06 4Q '06 1Q '07 0.092 0.091 0.092 0.09 0.084 0.083 0.092 0.105 0.119 ResCap - Held for Investment Portfolio - Credit Quality Ass
Slide 11: ResCap - Lending Receivables Portfolio - Credit Quality
1Q '05 2Q '05 3Q '05 4Q '05 1Q '06 2Q '06 3Q '06 4Q '06 1Q '07 0 0.0002 0 0.0003 0 0.0003 0 0.0002 0.0038 1Q '05 2Q '05 3Q '05 4Q '05 1Q '06 2Q '06 3Q '06 4Q '06 1Q '07 0.0005 0.0012 0.0008 0.005 0.0041 0.0024 0.0021 0.0929 0.1094 ResCap - Lending Receivables Portfolio - Credit Quality Total lending
Slide 12: ResCap - Business Capital
ResCap - Business Capital Business Capital's operating earnings were flat despite continued weakness in the home building industry Residential real estate market remains challenging for our customers Diversified presence across borrowers, geographies and products Bolstering risk mitigation efforts R
Slide 13: ResCap - International
ResCap - International 13 Year-over-year improvement largely driven by increased gain on sale volume sold Challenging competition reduced expected loan production but up year-over-year U.K. market continued to show strong appetite for assets, generating favorable margins on whole loan sales Favorabl
Slide 14: ResCap - Recent Changes in U.S. Underwriting and Servicing
ResCap - Recent Changes in U.S. Underwriting and Servicing Tightened underwriting standards for consumer loans in a number of areas Nonprime and Alt-A mortgages Second liens and home equity loans Refocused warehouse lending strategy Targeting relationship-oriented clients Stricter adherence to margi
Slide 15: ResCap - Liquidity
ResCap - Liquidity Cash balance of $2.6 billion at the end of 1Q 07, up $600 million from YE 2006 Ended 1Q with $7.2 billion in equity (includes $500 million March capital contribution) Additional $500 million capital contribution made in April Only $1.3 billion unsecured debt maturities in 2007 Str
Slide 16: ResCap - 2007 Outlook
ResCap - 2007 Outlook Weak financial performance in 1Q 07 largely driven by deterioration in the nonprime market Profits from international and business capital operations overshadowed by disappointing U.S. mortgage performance Multiple actions underway to mitigate risk and improve controls New mana
Slide 17: Auto Finance - 1Q 2007 Key Metrics
Strong lease and retail originations Auto Finance - 1Q 2007 Key Metrics Originations Credit Losses Lease Residuals Margins 17 Credit performance remains at historically low levels U.S. residual performance improved versus 2006, reflecting higher sales proceeds supported by stable used car prices Imp
Slide 18: Auto Finance - Consumer Originations
Auto Finance - Consumer Originations ($ billions) Total Units 603 627 817 528 624 (in 000s) 18 1Q 2007 new vehicle originations in line with 2006 levels despite lower retail volumes at GM Significant increase in used vehicle originations consistent with growth strategy
Slide 19: Auto Finance - Consumer Credit Quality
Auto Finance - Consumer Credit Quality 1Q 2007 delinquency up slightly versus year-ago levels. Performance remains near historically low levels Losses remain near historically low levels Annualized credit losses as a % of average managed retail contracts Delinquencies as a % of serviced retail asset
Slide 20: Auto Finance - Nonprime
Auto Finance - Nonprime Nonprime auto market has not experienced the pressures affecting the nonprime mortgage industry Historically, leading indicators for deterioration in nonprime auto credit performance have been rising interest rates or rising unemployment - neither one a factor to date GMAC's
Slide 21: Insurance - 1Q 2007 Key Metrics
Insurance - 1Q 2007 Key Metrics Written Revenue* Underwriting Results Investment Income Growth in reinsurance and international markets offset by declines in vehicle service contracts and personal lines * Includes Written Premium 21 Strong underwriting results driven by higher earned premiums and lo
Slide 22: Insurance - Consolidated Earnings
Insurance - Consolidated Earnings Favorable underlying core earnings trend continues 22 Core Earnings = Underwriting income + Investment income (net of tax) Represents a post tax number, pre-tax capital gains was $4 for 2007 and $29 for 2006 Represents a post tax number, pre-tax interest expense was
Slide 23: GMAC and ResCap maintain strong liquidity position
GMAC and ResCap maintain strong liquidity position Cash levels down primarily due to significant debt maturities in 1Q 2007 Completed $6 billion bridge funding facility to provide added liquidity protection for older wholesale securitizations Received $1 billion equity injection from GM based on fin
Slide 24: GM Exposure
GM Exposure Certain unsecured credit exposure to GM U.S. entities capped contractually at $1.5 billion U.S. exposure $0.9 billion at 3/31/07 Exposure monitored continuously Governance mandates that any new credit exposure over $5 million with affiliated parties (includes both GM and Cerberus) requir
Slide 25: Growth Initiatives
Growth Initiatives Leverage existing GM relationships to facilitate growth of diversified wholesale and retail business 1Q used vehicle volume up significantly compared to 2006 levels Increased insurance offerings and improved penetration Develop platform for growth of auto wholesale and consumer fi
Slide 26: Summary
1Q 2007 Disappointing performance driven largely by ResCap loss due to falling nonprime mortgage asset values Solid performances at Insurance and Auto Finance were not enough to offset the loss Despite operating challenges, GMAC and ResCap maintain strong liquidity position Significant cash balances
Slide 27: Supplemental Charts
‘Supplemental Charts
Slide 28: Sales Proceeds on Scheduled U.S. Lease Terminations
Sales Proceeds on Scheduled U.S. Lease Terminations Overall trends remain stable 1Q performance improved reflecting strong used car prices Note: Figures represent GMAC serviced portfolio ($ per vehicle) S1 Lease terminations 69 69 68 66 76 (Units 000s)
Slide 29: Reconciliation of Managed to Serviced Assets
Reconciliation of Managed to Serviced Assets S2 * Retail receivables included in whole loan sales and full securitization transactions where GMAC is no longer exposed to credit and/or interest rate risk Retail Auto Finance
Slide 30: Reconciliation of Insurance Core Earnings
Reconciliation of Insurance Core Earnings Amount within premium tax and other expense in Forms 10-Q and 10-K respectively Amount within investment income in Forms 10-Q and 10-K respectively S3