Ally Financial : Q4 2018 Ally Financial Inc. Earnings Financial Supplement

FOURTH QUARTER 2018 FINANCIAL SUPPLEMENT

ALLY FINANCIAL INC.

FORWARD-LOOKING STATEMENTS AND ADDITIONAL INFORMATION

This document 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. This information is preliminary and based on company and third-party data available at the time of the presentation or related communication.

This document and related communications contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements can be identified by the fact that they do not relate strictly to historical or current facts-such as our statements about targets and expectations for various financial and operating metrics. Forward-looking statements often use words such as "believe," "expect," "anticipate," "intend," "pursue," "seek," "continue," "estimate," "project," "outlook," "forecast," "potential," "target," "objective," "trend," "plan," "goal," "initiative," "priorities," or other words of comparable meaning or future-tense or conditional verbs such as "may," "will," "should," "would," or "could." Forward-looking statements convey our expectations, intentions, or forecasts about future events, circumstances, or results. All forward-looking statements, by their nature, are subject to assumptions, risks, and uncertainties, which may change over time and many of which are beyond our control. You should not rely on any forward-looking statement as a prediction or guarantee about the future. Actual future objectives, strategies, plans, prospects, performance, conditions, or results may differ materially from those set forth in any forward-looking statement. Some of the factors that may cause actual results or other future events or circumstances to differ from those in forward-looking statements are described in our Annual Report on Form 10-K for the year ended December 31, 2017, our subsequent Quarterly Reports on Form 10-Q or Current Reports on Form 8-K, or other applicable documents that are filed or furnished with the U.S. Securities and Exchange Commission (collectively, our "SEC filings"). Any forward-looking statement made by us or on our behalf speaks only as of the date that it was made. We do not undertake to update any forward-looking statement to reflect the impact of events, circumstances, or results that arise after the date that the statement was made, except as required by applicable securities laws. You, however, should consult further disclosures (including disclosures of a forward-looking nature) that we may make in any subsequent SEC filings.

This document and related communications contain specifically identified non-GAAP financial measures, which supplement the results that are reported according to generally accepted accounting principles ("GAAP"). These non-GAAP financial measures may be useful to investors but should not be viewed in isolation from, or as a substitute for, GAAP results. Differences between non-GAAP financial measures and comparable GAAP financial measures are reconciled in the presentation.

Our use of the term "loans" describes all of the products associated with our direct and indirect lending activities. The specific products include loans, retail installment sales contracts, lines of credit, leases, and other financing products. The term "lend" or "originate" refers to our direct origination of loans or our purchase or acquisition of loans.

4Q 2018 Preliminary Results

ALLY FINANCIAL INC.
TABLE OF CONTENTS
Page(s)
Consolidated Results
Consolidated Financial Highlights	4
Consolidated Income Statement	5
Consolidated Period-End Balance Sheet	6
Consolidated Average Balance Sheet	7
Segment Detail
Segment Highlights	8
Automotive Finance	9-10
Insurance	11
Mortgage Finance	12
Corporate Finance	13
Corporate and Other	14
Credit Related Information	15-16
Supplemental Detail
Capital	17
Liquidity	18
Net Interest Margin and Deposits	19
Ally Bank Consumer Mortgage HFI Portfolios	20
Earnings Per Share Related Information	21
Adjusted Tangible Book Per Share Related Information	22
Core ROTCE Related Information	23
Adjusted Efficiency Ratio Related Information	24
4Q 2018 Preliminary Results

ALLY FINANCIAL INC.

CONSOLIDATED FINANCIAL HIGHLIGHTS

($ in millions, shares in thousands)

QUARTERLY TRENDS

CHANGE VS.

FULL YEARSelected Income Statement Data

4Q 18

3Q 18

2Q 18

1Q 18

4Q 17

3Q 18

4Q 17

FY 2018

FY 2017

CHANGE

Net financing revenue (ex. Core OID) (1)

$

• 1,163 $

• 1,129 $

• 1,115 $

• 1,069 $

• 1,113 $

Core OID

(23)

(22)

(21)

(20)

(19)

Net financing revenue (as reported)

Other revenue (ex. change in the fair value of equity securities) (2)

Change in the fair value of equity securities (3)

Other revenue (as reported)

Provision for loan losses Total noninterest expense (4)

1,140 393 (95) 298 266 804

1,107 392 6 398 233 807

1,094 356 8 364 158 839

1,049 394 (40) 354 261 814

1,094 379 - 379 294 769

34 (1) 33 1 (101)

$

• 50 $

• 4,476 $

4,292 $ 184

(4)

(86)

(71) (15)

46 14 (95)

(100)

33 (3)

(81) (28) 35

4,390 1,535 (121) 1,414 918 3,264

4,221 169

1,544 (9)

- (121)

1,544 (130)

1,148 (230)

3,110 154

Pre-tax income from continuing operations Income tax expense

Income / (loss) from discontinued operations, net of tax Net income attributable to common shareholders

368 79 1

465 91 -

461 113 1

328 76 (2)

410 231 2

(97)

(42)

(12)

(152)

$

290

$

374

$

349

$

250

$

181

$

1 (84)

(1)

$ 109

$

1,622 359 - 1,263

1,507

115

581 (222)

3 (3)

$

929

$

334

Selected Balance Sheet Data (Period-End)

Total assets

$

178,869

$

173,101

$

171,345

$

• 170,021 $

167,148

$

5,768 $ 11,721

Consumer loans Commercial loans Allowance for loan losses Deposits

87,240

86,501

85,604

84,002

81,821

739 5,419

42,686

40,104

39,940

41,325

41,072

2,582 1,614

(1,242)

(1,248)

(1,257)

(1,278)

(1,276)

6 34

106,178

101,379

98,734

97,446

93,256

Total equity

13,268

13,085

13,139

13,082

13,494

4,799 183

12,922

(226)

Common Share Count

Weighted average basic (5)

Weighted average diluted (5)

Issued shares outstanding (period-end)

411,931 414,750 404,900

422,187 424,784 416,591

430,628 432,554 425,752

436,213 438,931 432,691

442,108 444,985 437,054

(10,256) (10,034) (11,691)

(30,177) (30,235) (32,154)

425,165 427,680 404,900

453,704 (28,539)

455,350 (27,670)

437,054 (32,154)

Per Common Share Data

Earnings per share (basic) (5)

$

0.70

$

0.89

$

0.81

$

0.57 $ 0.41

$

(0.18)

$

0.29

$

2.97 $ 2.05 $ 0.92

Earnings per share (diluted) (5)

0.70

0.88

0.81

0.57 0.41

(0.18)

0.29

2.95 2.04 0.91

Adjusted earnings per share (6) Book value per share

0.92

0.91

0.83

0.68 0.70

0.01

0.23

3.34 2.39 0.94

32.8

31.4

30.9

30.2 30.9

1.4

1.9

32.8 30.9 1.9

Tangible book value per share (7)

32.1

30.7

30.2

29.6 30.2

1.3

1.9

32.1 30.2 1.9

Adjusted tangible book value per share (7)

29.9

28.6

28.1

27.4 28.1

1.3

1.9

29.9 28.1 1.9

Select Financial Ratios

Net interest margin (as reported)

2.66%

2.67%

2.68%

2.64% 2.75%

2.65% 2.71%

Net interest margin (ex. Core OID) (8) Cost of funds

2.72%

2.72%

2.74%

2.69% 2.80%

2.70% 2.76%

2.60%

2.45%

2.30%

2.16% 2.01%

2.38% 1.97%

Cost of funds (ex. Core OID) (8)

2.52%

2.38%

2.23%

2.09% 1.94%

2.31% 1.91%

Efficiency Ratio (9)

55.9%

53.6%

57.5%

58.0% 52.2%

56.2% 53.9%

Adjusted efficiency ratio (8)(9)

46.9%

46.0%

47.7%

50.1% 46.4%

47.6% 45.8%

Return on average assets (10)

0.7%

0.9%

0.8%

0.6% 0.4%

0.7% 0.6%

Return on average total equity (10)

8.8%

11.4%

10.6%

7.5% 5.3%

9.4% 6.9%

Return on average tangible common equity (10) (11)

9.0%

11.7%

10.9%

7.7% 5.5%

9.8% 7.1%

Core ROTCE (11)

13.4%

13.7%

12.8%

10.6% 10.8%

12.3% 9.8%

Capital Ratios (12)

Common Equity Tier 1 (CET1) capital ratio Tier 1 capital ratio

Total capital ratio Tier 1 leverage ratio

9.1% 10.8% 12.3% 9.0%

9.4% 11.1% 12.7% 9.2%

9.4% 11.1% 12.7% 9.2%

9.3% 9.5%

11.0% 11.2%

12.6% 12.9%

9.3% 9.5%

• (1) Represents a non-GAAP financial measure. Excludes Core OID. For more details refer to page 21.

• (2) Represents a non-GAAP financial measure. Adjusted for change in the fair value of equity securities due to the implementation of ASU 2016-01, effective 1/1/18, which requires change in the fair value of equity securities to be recognized in current period net income as compared to prior periods in which such adjustments were recognized through other comprehensive income, a component of equity. For non-GAAP calculation methodology and details see page 21.

(3) Change in fair value of equity securities impacts the Insurance and Corporate Finance segments. Excludes equity fair value adjustments related to ASU 2016-01, effective 1/1/2018, which requires change in the fair value of equity securities to be recognized in current period net income as compared to prior periods in which such adjustments were recognized through other comprehensive income, a component of equity.

• (4) Including but not limited to employee related expenses, commissions and provision for losses and loss adjustment expense related to the insurance business, information technology expenses, servicing expenses, facilities expenses, marketing expenses, and other professional and legal expenses.

• (5) Includes shares related to share-based compensation that vested but were not yet issued.

• (6) Represents a non-GAAP financial measure. For more details refer to page 21.

• (7) Represents a non-GAAP financial measure. For more details refer to page 22.

• (8) Represents a non-GAAP financial measure. Excludes Core OID. For more details refer to page 21.

• (9) Represents a non-GAAP financial measure. For more details refer to page 24.

• (10) Return metrics are annualized.

• (11) Return metrics are annualized. Represents a non-GAAP financial measure. For more details refer to page 23.

• (12) Basel III rules became effective on January 1, 2015, subject to transition provisions primarily related to deductions and adjustments impacting CET1 capital and Tier 1 capital.

4Q 2018 Preliminary Results

ALLY FINANCIAL INC. CONSOLIDATED INCOME STATEMENT

($ in millions)

QUARTERLY TRENDS

CHANGE VS.

FULL YEAR

4Q 18

3Q 18

2Q 18

1Q 18

4Q 17

3Q 18

4Q 17

FY 2018

FY 2017

CHANGE

Financing revenue and other interest income Interest and fees on finance receivables and loans Interest on loans held-for-sale

$

1,790

$

1,708

$

1,647

$

5

4

6

1,543 -$

1,518 -$

• 82 $

272

$

• 6,688 $

5,819

$ 869

1

5

15

- 15

Total interest and dividends on investment securities Interest-bearing cash

211

182

173

163

153

29

58

729

568 161

22

18

17

15

14

4

8

72

37 35

Other earning assets Operating leases

15

16

15

13

9

(1)

6

59

31 28

365

368

374

382

402

(3)

(37)

1,489

1,867 (378)

Total financing revenue and other interest income Interest expense

2,408

2,296

2,232

2,116

2,096

112

312

9,052

8,322 730

Interest on deposits

523

462

399

351

311

61

212

1,735

1,077 658

Interest on short-term borrowings Interest on long-term debt

48

29

40

32

33

19

15

149

127 22

457

451

434

411

396

6

61

1,753

1,653 100

Total interest expense

1,028

942

873

794

740

86

288

3,637

2,857 780

Depreciation expense on operating lease assets Net financing revenue (as reported)

240

247

265

273

262

(7)

(22)

1,025

1,244 (219)

$

1,140

$

1,107

$

1,094

$

1,049

$

• 1,094 $

• 33 $

• 46 $

• 4,390 $

4,221 $ 169

Other revenue

Servicing fees

6

6

7

8

10

1

(3)

27

51 (23)

Insurance premiums and service revenue earned Gain on mortgage and automotive loans, net Loss on extinguishment of debt

269

258

239

256

253

11

16

1,022

973 49

6 -

17 -

1 -

1 -

3

(11)

3

(1)

-

1

25 -

68 (43)

(7) 7

Other (loss) / gain on investments, net Other income, net of losses

(87)

22

27

(12)

29

(109)

(116)

(50)

102 (152)

Total other revenue Total net revenue Provision for loan losses Noninterest expense Compensation and benefits expense

104 298 1,438 266

95 398 1,505 233

91 364 1,458 158

100 354 1,403 261

86 379 1,473 294

9 (100) (67) 33

19 (81) (35) (28)

391 1,414 5,804 918

357 34

1,544 (130)

5,765 39

1,148 (230)

Insurance losses and loss adjustment expenses Other operating expenses

Total noninterest expense

283 54 467 804

274 77 456 807

292 101 446 839

306 63 445 814

281 54 434 769

9 (23) 11 (3)

2 - 33 35

1,155 295 1,814 3,264

1,095 60

332 (37)

1,683 131

3,110 154

Pre-tax income from continuing operations Income tax expense from continuing operations Net income from continuing operations

$

Income / (loss) from discontinued operations, net of tax Net income

• 368 $ 79 289 1

• 465 $ 91 374 -

• 461 $ 113 348 1

• 328 $ 76 252 (2)

• 410 $ 231 179 2

• (97) $

  • (42) $

  (12)

  (152)

  (85)

  1

  110 (1)

  • 1,622 $ 359 1,263 -

  1,507 $ 115

  581 (222)

  926 337

  3 (3)

  Core Pre-Tax Income Walk

  Net financing revenue (ex. Core OID) (1) Adjusted other revenue (2)

  $ $

  290

  $

  374

  $

  349

  $

  250

  $

  181

  $

• (84) $

109

$

1,263

$

929

$

334

Provision for loan losses Noninterest expense Core pre-tax income (3)

• 1,163 $ 393 266 804

  • 1,129 $ 392 233 807

    • 1,115 $ 356 158 839

      • 1,069 $ 394 261 814

        • 1,113 $ 379 294 769

          • 34 $ 1 33 (3)

          • 50 $ 14

          (28) 35

          • 4,476 $ 1,535 918 3,264

          4,292 $ 184

          1,544 (9)

          1,148 (230)

          3,110 154

          $

          Core OID

          Change in the fair value of equity securities (4)

          • 486 $ 23 95

• 481 $ 22

• 474 $ 21

(6)

(8)

• 388 $ 20 40

• 429 $ 19

-

• 6 $ 1 101

• 57 $ 4 95

• 1,829 $ 86 121

1,578

$ 251

71 15

- 121

Pre-tax income from continuing operations

$

368

$

465

$

461

$

328

$

410

$

(97)

$

(42)

$

1,622

$

1,507

$

115

• (1) Represents a non-GAAP financial measure. Excludes Core OID. For more details refer to page 21.

• (2) Represents a non-GAAP financial measure. Excludes equity fair value adjustments related to ASU 2016-01, effective 1/1/2018, which requires change in the fair value of equity securities to be recognized in current period net income as compared to prior periods in which such adjustments were recognized through other comprehensive income, a component of equity. For more details refer to page 21.

(3) Core pre-tax income is a non-GAAP financial measure that adjusts pre-tax income from continuing operations by excluding (1) Core OID and (2) equity fair value adjustments related to ASU 2016-01, effective 1/1/2018, which requires change in the fair value of equity securities to be recognized in current period net income as compared to prior periods in which such adjustments were recognized through other comprehensive income, a component of equity. Management believes core pre-tax income can help the reader better understand the operating performance of the core businesses and their ability to generate earnings.

(4) Change in fair value of equity securities impacts the Insurance and Corporate Finance segments. Excludes equity fair value adjustments related to ASU 2016-01, effective 1/1/2018, which requires change in the fair value of equity securities to be recognized in current period net income as compared to prior periods in which such adjustments were recognized through other comprehensive income, a component of equity.

4Q 2018 Preliminary Results