EX-99.1 2 d548245dex991.htm EX-99.1 EX-99.1

Exhibit 99.1

 

 

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News release: IMMEDIATE RELEASE

Ally Financial Reports Second Quarter 2018 Financial Results

Net Income of $349 million, $0.81 EPS, $0.83 Adjusted EPS1

 

     Second Quarter Results    
    

 

PRE-TAX INCOME      RETURN ON EQUITY      COMMON SHAREHOLDER EQUITY
$461 million      10.6%      $30.86/share
         

CORE PRE-TAX INCOME1

$474 million

    

CORE ROTCE1

12.8%

    

ADJUSTED TANGIBLE BOOK VALUE1

$28.07/share

 

QUARTERLY

HIGHLIGHTS

  

  EPS: $0.81; Adjusted EPS1: $0.83, up 43% YoY

 

  Net financing revenue of $1,094 million, up 3% YoY

 

  Net interest margin (NIM) of 2.68%, up 4 basis points (bps) QoQ; NIM ex. Core OID1 of 2.74%, up 5 bps QoQ

 

  Consumer auto originations of $9.6 billion, up $1.0 billion YoY

 

  Retail auto portfolio yield up 28 bps YoY and commercial auto portfolio yield up 83 bps YoY

 

  Retail auto net charge-off rate of 1.04%, down 16 bps YoY

 

  Consolidated net charge-off rate of 0.57%, down 9 bps YoY

 

  Provision for loan losses of $158 million, down $111 million YoY

 

  Total deposits of $98.7 billion, up $12.6 billion YoY

 

  Corporate Finance pre-tax earnings of $58 million, up 66% YoY

 

 

Ally Chief Executive Officer Jeffrey Brown commented on the financial results:

 

“Ally posted its best quarterly Adjusted EPS1 and Core ROTCE1 as a public company while delivering solid operational results across its core businesses.”

 

“Our success in diversifying and optimizing the auto finance business helped drive higher risk-adjusted returns, with retail auto portfolio yield increasing 28 bps year-over-year and retail auto net charge-offs declining 16 bps year-over-year. Additionally, consumer originations increased by $1.0 billion versus the prior year period as we continued to diversify and grow our dealer relationships.”

 

“We received CCAR non-objection from the Federal Reserve, enabling us to return significant capital to stockholders, with approved capital actions representing approximately 11% of our current market capitalization.”

 

“Overall, our earnings growth path remains intact as we continue to execute on our strategic plan and drive long-term value for our stockholders.”

 

 

     Notable Items    
    

•  Retail auto net charge-off rate down 16 bps YoY, the largest YoY decline since Ally’s IPO

 

•  Added 41 thousand retail deposit customers in 2Q 18, growing total retail deposit customers to 1.52 million

 

•  Enhanced digital customer experience and capabilities across online and mobile interfaces

 

•  Continued progress on product expansion initiatives

  

•  Received CCAR non-objection to Ally’s capital plan through the second quarter of 2019

 

  Share repurchase program authorization increased 32% from $760 million to $1.0 billion

 

  Quarterly common dividend increasing from $0.13 per share to $0.15 per share, beginning in 3Q 18

 

1  The following are non-GAAP financial measures which Ally believes are important to the reader of the Consolidated Financial Statements, but which are supplemental to and not a substitute for GAAP measures: Adjusted Earnings per Share (Adjusted EPS), Core Pre-Tax Income, Core Net Income Attributable to Common Shareholders, Core OID, Core Return on Tangible Common Equity (Core ROTCE), Adjusted Efficiency Ratio, Tangible Common Equity, Net Financing Revenue (excluding Core OID) and Adjusted Tangible Book Value per Share (Adjusted TBVPS). These measures are used by management and we believe are useful to investors in assessing the company’s operating performance and capital. Refer to the Definitions of Non-GAAP Financial Measures and Other Key Terms, and Reconciliation to GAAP later in this document.


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     Discussion of Second Quarter Results    
    

 

Net income attributable to common shareholders was $349 million in the quarter, compared to net income attributable to common shareholders of $252 million in the second quarter of 2017, driven by higher net financing revenue, lower provision for loan losses and a lower effective tax rate, partially offset by a decline in other revenue and higher noninterest expense.

 

Net financing revenue improved to $1,094 million, up $27 million from a year ago, driven by asset and deposit growth and liability mix shift. Net financing revenue was $45 million higher quarter-over-quarter largely due to higher retail and commercial auto yields.

 

NIM of 2.68%, including Core OIDA of 6 bps, decreased 8 bps year-over-year and increased 4 bps quarter-over-quarter. Excluding Core OIDA , NIM was 2.74%, down 6 bps year-over-year, primarily due to lower lease portfolio yield and balance, growth of capital efficient, but lower yielding assets, as well as higher funding costs.

 

Other revenue decreased $24 million year-over-year, primarily due to loan sale activity in the prior year period.

 

Provision for loan losses declined $111 million year-over-year to $158 million as a result of reserve release and a 16 bps decline in retail auto net charge-off rate.

 

Noninterest expense increased $29 million year-over-year, driven primarily by costs associated with the continued growth of our core businesses and restructuring expense in the auto finance business, partially offset by lower weather losses.

 

     Second Quarter Financial Results    
    
                          Increase/(Decrease) vs.  
($ millions except per share data)    2Q 18      1Q 18      2Q 17      1Q 18      2Q 17  

Net Financing Revenue (excluding Core OID)1

   $ 1,115      $ 1,069      $ 1,084      $ 46      $ 31  

Core OID

     (21)        (20)        (17)        (1)        (4)  

(a) Net Financing Revenue (as reported)

     1,094        1,049        1,067        45        27  

Total Other Revenue (excluding Change in Fair Value of Equity Securities)2

     356        394        388        (38)        (32)  

Change in Fair Value of Equity Securities2

     8        (40)        -        48        8  

(b) Total Other Revenue (as reported)

     364        354        388        10        (24)  

(c) Provision for Loan Losses

     158        261        269        (103)        (111)  

(d) Noninterest Expense

     839        814        810        25        29  

Pre-tax Income from Continuing Operations (a+b-c-d)

   $ 461      $ 328      $ 376      $ 133      $ 85  

Income Tax Expense

     113        76        122        37        (9)  

Income (Loss) from Discontinued Operations, Net of Tax

     1        (2)        (2)        3        3  

Net Income

   $ 349      $ 250      $ 252      $ 99      $ 97  
     2Q 18      1Q 18      2Q 17      1Q 18      2Q 17  

GAAP EPS (diluted)

   $ 0.81      $ 0.57      $ 0.55      $ 0.24      $ 0.26  

Discontinued Operations, Net of Tax

     (0.00)        0.00        0.00        (0.01)        (0.01)  

Core OID, Net of Tax

     0.04        0.04        0.02        0.00        0.01  

Change in Fair Value of Equity Securities, Net of Tax

     (0.01)        0.07        -        (0.09)        (0.01)  

Adjusted EPS3

   $ 0.83      $ 0.68      $ 0.58      $ 0.15      $ 0.25  

Return on Equity

     10.6%        7.5%        7.5%        

Core ROTCE3

     12.8%        10.6%        9.6%        

Adj. Efficiency Ratio3

     47.7%        50.1%        43.7%        

Effective Tax Rate

     24.5%        23.2%        32.4%        
                                              
(1) Represents a non-GAAP financial measure. Adjusted for Core OID. Refer to the Definitions of Non-GAAP Financial Measures and Other Key Terms later in this press release.
(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.
(3) Represents a non-GAAP financial measure. Refer to the Definitions of Non-GAAP Financial Measures and Other Key Terms and Reconciliation to GAAP later in this press release.

 

 

A Represents a non-GAAP financial measure. Refer to the Definitions of Non-GAAP Financial Measures and Other Key Terms later in this press release.

 

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     Pre-Tax Income by Segment    
    
                          Increase/(Decrease) vs.  
($ millions)    2Q 18      1Q 18      2Q 17      1Q 18      2Q 17  

Automotive Finance

   $ 382      $ 268      $ 347      $ 114      $ 35  

Insurance

     11        27        (21)        (16)        32  

Dealer Financial Services

   $ 393      $ 295      $ 326      $ 98      $ 67  

Corporate Finance

     58        29        35        29        23  

Mortgage Finance

     14        8        7        6        7  

Corporate and Other

     (4)        (4)        8        -        (12)  
           

Pre-Tax Income from Continuing Operations

   $ 461      $ 328      $ 376      $ 133      $ 85  

Core OID1

     21        20        17        1        4  

Change in Fair Value of Equity Securities2

     (8)        40        -        (48)        (8)  
           

Core Pre-tax Income3

   $ 474      $ 388      $ 393      $ 86      $ 81  
              

 

 

(1) Core OID for all periods shown is applied to the pre-tax income of the Corporate and Other segment. Refer to the Definitions of Non-GAAP Financial Measures and Other Key Terms later in this press release.
(2) Change in fair value of equity securities impacts the Insurance and Corporate Finance segments. Reflects 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.
(3) Core pre-tax income is a non-GAAP financial measure that adjusts pre-tax income from continuing operations for Core OID and equity fair value adjustments related to ASU 2016-01. 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. Refer to the Definitions of Non-GAAP Financial Measures and Other Key Terms later in this press release.

 

  Discussion of Segment Results  
   

 

 

Auto Finance

Pre-tax income of $382 million was $35 million higher year-over-year. Results reflect lower provision for loan losses, partially offset by higher noninterest expense and lower total net revenue, driven largely by lower other revenue due to loan sale activity in the prior year period.

 

Net financing revenue was $7 million lower year-over-year due to lease portfolio normalization, partially offset by higher retail auto yields and portfolio balances. Retail auto portfolio yield increased 28 bps year-over-year to 6.08%.

 

Provision for loan losses was $96 million lower year-over-year, driven by reserve release and a lower retail auto net charge-off rate. The retail auto net charge-off rate declined 16 bps year-over-year to 1.04%, the lowest retail auto net charge-off rate in two years.

 

Consumer auto originations of $9.6 billion in the quarter included $4.9 billion of used retail volume, $3.4 billion of new retail volume, and $1.2 billion of leases. Total consumer auto originations were up $1.0 billion year-over-year.

 

End of period auto earning assets decreased $0.5 billion year-over-year to $114.8 billion as growth in the retail auto portfolio was slightly outpaced by declines in operating lease assets and lower floorplan balances. Commercial earning assets of $35.6 billion were $3.2 billion lower year-over-year primarily due to lower dealer inventory levels.

 

Insurance

Pre-tax income, excluding the impact of the implementation of ASU 2016-01B, was $3 million in the quarter, up $24 million versus the prior year, driven primarily by vehicle inventory insurance rate increases and lower weather losses, which were down $23 million year-over-year.

 

Earned premiums were up $11 million year-over-year, primarily due to higher vehicle inventory insurance rates.

 

Written premiums were up $58 million year-over-year at $278 million, due to growth in vehicle service contract volume and higher vehicle inventory insurance rates.

 

Total investment income was up $1 million year-over-year at $30 million, excluding an $8 million increase in the fair value of equity securities during the quarter related to the implementation of ASU 2016-01B .

 

 

B Effective 1/1/18, ASU 2016-01 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.

 

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Corporate Finance

Pre-tax income was $58 million in the quarter, compared to $35 million in the prior year period driven by higher net financing revenue, higher loan syndication income and lower provision for loan losses.

 

Net financing revenue increased $9 million year-over-year to $57 million, driven by strong asset growth and accelerated deferred fees. The HFI portfolio increased 18% year-over-year from $3.6 billion to $4.2 billion.

 

Provision for loan losses was down $12 million year-over-year primarily due to a recovery recognized in the quarter.

 

Mortgage Finance

Pre-tax income was $14 million in the quarter, compared to $7 million in the prior year period. Net financing revenue was up $12 million year-over-year to $44 million, with total assets up $4.5 billion in the past year driven primarily by bulk mortgage purchases.

 

Noninterest expense increased $7 million year-over-year primarily due to the continued build out of the direct-to-consumer mortgage product and asset growth.

 

Provision for loan losses was slightly lower year-over-year and quarter-over-quarter as the portfolio continues to demonstrate strong credit performance.

 

  Liquidity, Capital & Deposits  
       

 

Capital

Ally paid a $0.13 per share quarterly common dividend and completed $195 million of share repurchases, including shares withheld to cover income taxes owed by participants related to share-based incentive plans. Ally’s Board of Directors approved a $0.15 per share common dividend for the third quarter of 2018.

 

Preliminary fully phased-in Basel III Common Equity Tier 1 (CET1) capital ratioC increased from 9.2% to 9.3% quarter-over-quarter, primarily due to strong earnings and continued deferred tax asset utilization.

 

Liquidity & Funding

Consolidated cash and cash equivalents totaled $3.9 billion at quarter-end compared to $3.7 billion at the end of the first quarter. Ally had $1.0 billion of institutional unsecured debt maturities in the quarter.

 

U.S. auto term securitizations totaled $2.8 billion for the quarter. Additionally, Ally renewed $1.0 billion in secured credit facilities during the quarter.

 

At quarter-end, 86% of Ally’s total assets were funded at Ally Bank.

 

Deposits represented 64% of Ally’s funding portfolio at quarter-end, excluding Core OID balance, improving from 59% a year ago.

 

Deposits

Retail deposits were up $10.6 billion year-over-year to $81.7 billion, with total deposits of $98.7 billion at quarter-end, up $1.3 billion for the quarter and $12.6 billion higher year-over-year.

 

The average retail deposit rate was 1.58% for the quarter, up 46 bps year-over-year and up 13 bps quarter-over-quarter. Ally’s cumulative retail portfolio deposit beta from the third quarter of 2015 through the second quarter of 2018 was 25%.

 

Ally’s retail deposit customer base grew 15% year-over-year, totaling over 1.5 million customers at quarter-end, while adding 41 thousand customers over the prior quarter. Average customer balance ended the quarter at $53.9 thousand. Millennials continue to comprise the largest generation segment of new customers at 56%.

 

 

 

C Fully phased-in Basel III CET1 is a non-GAAP financial measure which Ally believes is important to the reader of the Consolidated Financial Statements, but which is supplemental to and not a substitute for GAAP measures. This measure is used by management and we believe is useful to investors in assessing the company’s capital. Ally’s preliminary Basel III Common Equity Tier 1 capital ratio, reflective of transition provisions, is 9.4%. Refer to the Definitions of Non-GAAP Financial Measures and Other Key Terms, and Reconciliation to GAAP later in this press release for details and calculation methodology.

 

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     Definitions of Non-GAAP  Financial Measures and Other Key Terms     
    

Ally believes the non-GAAP financial measures defined here are important to the reader of the Consolidated Financial Statements, but these are supplemental to and not a substitute for GAAP measures.

Adjusted Earnings per Share (Adjusted EPS) is a non-GAAP financial measure that adjusts GAAP EPS for revenue and expense items that are typically strategic in nature or that management otherwise does not view as reflecting the operating performance of the company. Management believes Adjusted EPS can help the reader better understand the operating performance of the core businesses and their ability to generate earnings. In the numerator of Adjusted EPS, GAAP net income attributable to common shareholders is adjusted for the following items: (1) excludes discontinued operations, net of tax, as Ally is primarily a domestic company and sales of international businesses and other discontinued operations in the past have significantly impacted GAAP EPS, (2) adds back the tax-effected non-cash Core OID, and (3) excludes equity fair value adjustments (net of tax) 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.

Adjusted Efficiency Ratio is a non-GAAP financial measure that management believes is helpful to readers in comparing the efficiency of its core banking and lending businesses with those of its peers. In the numerator of Adjusted Efficiency Ratio, total noninterest expense is adjusted for Insurance segment expense and rep and warrant expense. In the denominator, total net revenue is adjusted for Insurance segment revenue and Core OID. See Reconciliation to GAAP on page 8 for calculation methodology and details.

Adjusted Tangible Book Value per Share (Adjusted TBVPS) is a non-GAAP financial measure that reflects the book value of equity attributable to shareholders even if Core OID balance were accelerated immediately through the financial statements. As a result, management believes Adjusted TBVPS provides the reader with an assessment of value that is more conservative than GAAP common shareholder’s equity per share. Adjusted TBVPS generally adjusts common equity for: (1) goodwill and identifiable intangibles, net of deferred tax liabilities (DTLs) and (2) tax-effected Core OID balance to reduce tangible common equity in the event the corresponding discounted bonds are redeemed/tendered. In December 2017, tax-effected Core OID balance was adjusted from a statutory U.S. federal tax rate of 35% to 21% (“rate”) as a result of changes to U.S. tax law. The adjustment conservatively increased the tax-effected Core OID balance and consequently reduced Adjusted TBVPS as any acceleration of the non-cash charge in the future periods would flow through the financial statements at a 21% rate versus a previously modeled 35% rate. See Reconciliation to GAAP on page 7 for calculation methodology and details.

Common Equity Tier 1 (CET1) Capital Fully Phased-In: Under the Basel III regulatory framework as adopted in the United States, banking organizations like the company are required to comply with a minimum ratio of common equity tier 1 capital to risk-weighted assets (CET1 Capital Ratio). Common equity tier 1 capital generally consists of common stock (plus any related surplus and net of any treasury stock), retained earnings, accumulated other comprehensive income, and minority interests in the common equity of consolidated subsidiaries, subject to specified conditions and adjustments. The obligation to comply with the minimum CET1 Capital Ratio is subject to ongoing transition periods and other provisions under Basel III. Management believes that both the transitional CET1 Capital Ratio and the fully phased-in CET1 Capital Ratio are helpful to readers in evaluating the company’s capital utilization and adequacy in absolute terms and relative to its peers. The fully phased-in CET1 Capital Ratio is a non-GAAP financial measure that is reconciled to the transitional CET1 Capital Ratio on page 7.

Core Net Income Attributable to Common Shareholders is a non-GAAP financial measure that serves as the numerator in the calculations of Adjusted EPS and Core ROTCE and that, like those measures, is believed by management to help the reader better understand the operating performance of the core businesses and their ability to generate earnings. Core net income attributable to common shareholders adjusts GAAP net income attributable to common shareholders for discontinued operations net of tax, tax-effected Core OID expense, and tax-effected changes in equity investments measured at fair value. See Reconciliation to GAAP on page 6 for calculation methodology and details.

Core Original Issue Discount (Core OID) amortization expense is a non-GAAP financial measure for OID, primarily related to bond exchange OID which excludes international operations and future issuances. See page 7 for calculation methodology and details.

Core Outstanding Original Issue Discount Balance (Core OID balance) is a non-GAAP financial measure for outstanding OID, primarily related to bond exchange OID which excludes international operations and future issuances. See page 7 for calculation methodology and details.

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. See the Pre-Tax Income by Segment Table on page 3 for calculation methodology and details.

Core Return on Tangible Common Equity (Core ROTCE) is a non-GAAP financial measure that management believes is helpful for readers to better understand the ongoing ability of the company to generate returns on its equity base that supports core operations. For purposes of this calculation, tangible common equity is adjusted for Core OID balance and net DTA. Ally’s core net income attributable to common shareholders for purposes of calculating Core ROTCE is based on the actual effective tax rate for the period adjusted for any discrete tax items including tax reserve releases, which aligns with the methodology used in calculating adjusted earnings per share.

(1) In the numerator of Core ROTCE, GAAP net income attributable to common shareholders is adjusted for discontinued operations net of tax, tax-effected Core OID, and fair value adjustments (net of tax) 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.
(2) In the denominator, GAAP shareholder’s equity is adjusted for goodwill and identifiable intangibles net of DTL, Core OID balance, and net DTA.

Corporate and Other primarily consists of activity related to centralized corporate treasury activities such as management of the cash and corporate investment securities and loan portfolios, short- and long-term debt, retail and brokered deposit liabilities, derivative instruments, the amortization of the discount associated with new debt issuances and bond exchanges, and the residual impacts of our corporate FTP and treasury ALM activities. Corporate and Other also includes certain equity investments, the management of our legacy mortgage portfolio, and reclassifications and eliminations between the reportable operating segments. Subsequent to June 1, 2016, the revenue and expense activity associated with Ally Invest was included within the Corporate and Other segment.

 

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Net Financing Revenue (excluding OID) excludes Core OID.

Net Charge-Off Ratios are calculated as annualized net charge-offs divided by average outstanding finance receivables and loans excluding loans measured at fair value and loans held-for-sale.

Tangible Common Equity is a non-GAAP financial measure that is defined as common stockholders’ equity less goodwill and identifiable intangible assets, net of deferred tax liabilities. Ally considers various measures when evaluating capital adequacy, including tangible common equity. Ally believes that tangible common equity is important because we believe readers may assess our capital adequacy using this measure. Additionally, presentation of this measure allows readers to compare certain aspects of our capital adequacy on the same basis to other companies in the industry. For purposes of calculating Core return on tangible common equity (Core ROTCE), tangible common equity is further adjusted for tax-effected Core OID balance and net deferred tax asset. See page 6 for calculation methodology & details.

U.S. Consumer Auto Originations

 

    New Retail – standard and subvented rate new vehicle loans    Used Retail – used vehicle loans

    Growth – total originations from non-GM/Chrysler dealers and direct-to-consumer loans

   Lease – new vehicle lease originations

 

     Reconciliation to GAAP    
    

 

                                                                                   

Adjusted Earnings per Share

                            
    Numerator ($ millions)        2Q 18     1Q 18     2Q 17  

    GAAP Net Income Attributable to Common Shareholders

     $ 349     $ 250     $ 252  

Discontinued Operations, Net of Tax

       (1     2       2  

Core OID

       21       20       17  

Change in Fair Value of Equity Securities

       (8     40       -  

Tax on: Core OID & Change in Fair Value of Equity Securities (21% starting 1Q18, 35% prior)

       (3     (13     (6

    Core Net Income Attributable to Common Shareholders

 

[a]

   $ 358     $ 300     $ 265  

    Denominator

        

    Weighted-Average Common Shares Outstanding - (Diluted, thousands)

 

[b]

     432,554       438,931       458,819  

    Adjusted EPS

 

[a] ÷ [b]

   $ 0.83     $ 0.68     $ 0.58  

 

                                                                                   
Core Return on Tangible Common Equity (ROTCE)                           
Numerator ($ millions)        2Q 18     1Q 18     2Q 17  

GAAP Net Income Attributable to Common Shareholders

     $ 349     $ 250     $ 252  

Discontinued Operations, Net of Tax

       (1     2       2  

Core OID

       21       20       17  

Change in Fair Value of Equity Securities

       (8     40       -  

Tax on: Core OID & Change in Fair Value of Equity Securities (21% starting 1Q18, 35% prior)

       (3     (13     (6

Core Net Income Attributable to Common Shareholders

  [a]    $ 358     $ 300     $ 265  

Denominator (2-period average, $ billions)

        

GAAP Shareholder’s Equity

     $ 13.1     $ 13.3     $ 13.4  

Goodwill & Identifiable Intangibles, Net of Deferred Tax Liabilities (DTLs)

       (0.3     (0.3     (0.3

Tangible Common Equity

     $ 12.8     $ 13.0     $ 13.1  

Core OID Balance

       (1.1     (1.2     (1.2

Net Deferred Tax Asset (DTA)

       (0.5     (0.5     (0.9
Normalized Common Equity  

[b]

   $ 11.2     $ 11.3     $ 11.1  

Core Return on Tangible Common Equity

  [a] ÷ [b]      12.8     10.6     9.6

 

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Adjusted Tangible Book Value per Share

                            
    Numerator ($ billions)        2Q 18     1Q 18     2Q 17  

    GAAP Common Shareholder’s Equity

     $ 13.1     $ 13.1     $ 13.5  

Goodwill and Identifiable Intangible Assets, Net of DTLs

       (0.3     (0.3     (0.3

Tangible Common Equity

       12.8       12.8       13.2  

Tax-effected Core OID Balance (21% starting in 4Q17, 35% prior)

       (0.9     (0.9     (0.8

    Adjusted Tangible Book Value

 

[a]

   $ 12.0     $ 11.9     $ 12.4  
    Denominator                       

    Issued Shares Outstanding (period-end, thousands)

 

[b]

     425,752       432,691       452,292  
    Metric                       

    GAAP Common Shareholder’s Equity per Share

     $ 30.9     $ 30.2     $ 29.8  

Goodwill and Identifiable Intangible Assets, Net of DTLs per Share

       (0.7     (0.7     (0.6

Tangible Common Equity per Share

     $ 30.2     $ 29.6     $ 29.2  

Tax-effected Core OID Balance per Share (21% starting in 4Q17, 35% prior)

       (2.1     (2.1     (1.7

    Adjusted Tangible Book Value per Share

 

[a] ÷ [b]

   $ 28.1     $ 27.4     $ 27.4  

 

Regulatory Capital - Basel III transition to fully phased-in ($ billions)  
    Numerator        2Q 18     1Q 18     2Q 17  

    Common Equity Tier 1 Capital (Transition)

     $ 13.3     $ 13.1     $ 13.1  

DTAs Arising from NOL and Tax Credit Carryforwards Phased-in During Transition

       -       -       (0.1

Intangibles Phased-in During Transition

       -       -       (0.0

    Common Equity Tier 1 Capital (Fully Phased-in)

 

[a]

   $ 13.3     $ 13.1     $ 13.0  
    Denominator                       

    Risk-weighted Assets (Transition)

     $ 141.6     $ 141.2     $ 137.9  

DTAs Arising from Temporary Differences that Could Not Be Realized Through NOL, Net of VA and Net of DTLs Phased-in During Transition

       0.3       0.3       0.4  

Intangibles Phased-in During Transition

       -       -       (0.0

    Risk-weighted Assets (Fully Phased-in)

 

[b]

   $ 141.9     $ 141.6     $ 138.4  
    Metric                       

    Common Equity Tier 1 (Transition)

       9.4     9.3     9.5

    Common Equity Tier 1 (Fully Phased-in)

 

[a] ÷ [b]

     9.3     9.2     9.4

 

Original Issue Discount Amortization Expense ($ millions)    2Q 18     1Q 18     2Q 17  

    Core Original Issue Discount (Core OID) Amortization Expense (excludes accelerated OID)

   $ 21     $ 20     $ 17  

Other OID

     4       4       5  

    GAAP Original Issue Discount Amortization Expense

   $ 25     $ 24     $ 22  
                    
       
Outstanding Original Issue Discount Balance ($ millions)    2Q 18     1Q 18     2Q 17  

    Core Outstanding Original Issue Discount Balance (Core OID Balance)

   $ (1,137   $ (1,158   $ (1,215

Other Outstanding OID Balance

     (49     (53     (67

    GAAP Outstanding Original Issue Discount Balance

   $ (1,187   $ (1,211   $ (1,282

 

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Adjusted Efficiency Ratio

                          
    Numerator ($ millions)        2Q 18     1Q 18     2Q 17  

    GAAP Noninterest Expense

     $ 839     $ 814     $ 810  

Rep and Warrant Expense

       2       0       0  

Insurance Expense

       (268     (231     (280

    Adjusted Noninterest Expense for Adjusted Efficiency Ratio

 

[a]

   $ 573     $ 583     $ 530  

    Denominator ($ millions)

        

    Total Net Revenue

     $ 1,458     $ 1,403     $ 1,455  

Core OID

       21       20       17  

Insurance Revenue

       279       258       259  

    Adjusted Net Revenue for Adjusted Efficiency Ratio

 

[b]

   $ 1,200     $ 1,165     $ 1,213  

    Adjusted Efficiency Ratio

 

[a] ÷ [b]

     47.7%       50.1%       43.7%  

 

     Additional Financial Information    
    

For additional financial information, the second quarter 2018 earnings presentation and financial supplement are available in the Events & Presentations section of Ally’s Investor Relations Website at http://www.ally.com/about/investor/events-presentations/.

About Ally Financial Inc.

Ally Financial Inc. (NYSE: ALLY) is a leading digital financial services company with assets of $171.3 billion as of June 30, 2018. As a client-centric company with passionate customer service and innovative financial solutions, Ally is relentlessly focused on “Doing it Right” and being a trusted financial partner for its consumer, commercial, and corporate customers. Ally’s award-winning online bank (Ally Bank, Member FDIC and Equal Housing Lender) offers mortgage-lending services and a variety of deposit and other banking products, including CDs, online savings, money market and checking accounts, and IRA products. Ally also promotes the Ally CashBack Credit Card. Additionally, Ally offers securities brokerage and investment advisory services through Ally Invest. Ally remains one of the largest full-service auto finance operations in the country with a complementary auto-focused insurance business, which together serve more than 18,000 dealer customers and millions of auto consumers. Ally’s robust corporate finance business offers capital for equity sponsors and middle-market companies.

For more information and disclosures about Ally, visit https://www.ally.com/#disclosures.

Forward-Looking Statements

This earnings release 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 release or related communication.

This earnings release 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 earnings release 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 release.

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.

 

Contacts:   
Daniel Eller    Sari Jensen
Ally Investor Relations    Ally Communications (Media)
704-444-5216    646-781-2539
daniel.eller@ally.com                    sari.jensen@ally.com

 

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