Ally Financial Inc. 3Q 2024 Earnings Review October 18, 2024 Contact Ally Investor Relations at (866) 710-4623 or investor.relations@ally.com 3Q 2024 Preliminary Results 2 Forward-Looking Statements and Additional Information This presentation 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 base ...

Financial Performance - Ally Financial reported a consolidated net income of $300 million for Q3 2024, representing a 15% increase year-over-year[1]. - Net income attributable to common shareholders reached $330 million, reflecting a 64% increase compared to Q3 2023[7]. - Earnings per share (basic) for Q3 2024 was $1.07, a 23% increase from Q3 2023[7]. - Core net income attributable to common shareholders was $295 million in Q3 2024, compared to $299 million in Q2 2024, showing a slight decline[26]. - Total net revenue for Q3 2024 was $2,103 million, an increase of 5.2% compared to $2,000 million in the previous quarter[31]. - Total net revenue for 3Q 24 was $138 million, a 4% increase compared to 3Q 23[17]. Loan and Asset Management - The company’s total loans increased to $60 billion, up 10% from the previous quarter, driven by strong demand in automotive finance[1]. - Total assets at the end of Q3 2024 were $192,981 million, a slight increase of $450 million from Q2 2024[7]. - Consumer loans decreased to $103,095 million, down 490 million from Q2 2024[7]. - Total finance receivables and loans, net decreased to $133,801 million in Q3 2023, down from $135,211 million in Q2 2023, a decline of $1,410 million[9]. - Total assets decreased to $192,085 million in Q3 2024, down from $195,360 million in Q3 2023, representing a decline of $3,275 million[10]. Revenue and Expenses - Net financing revenue for Q3 2024 was $1,488 million, a decrease of 7% compared to Q3 2023[7]. - Other revenue increased significantly to $615 million in Q3 2024, up 110% from Q2 2024 and 180% from Q3 2023[7]. - Noninterest expense decreased to $1,225 million, down 5% from $1,286 million in the previous quarter[8]. - Total noninterest expense was $616 million, a slight decrease of $1 million or 0.2% compared to Q2 2024[12]. Capital and Liquidity - Ally Financial's liquidity position remains strong, with total deposits reaching $40 billion, a 5% increase from the previous quarter[1]. - The company is committed to maintaining a disciplined capital allocation strategy, with plans to return $200 million to shareholders through dividends and share repurchases in 2024[1]. - Total current available liquidity reached $67.9 billion in Q3 2024, up from $64.3 billion in Q2 2024, reflecting a growth of 5.6%[22]. - Common Equity Tier 1 (CET1) capital ratio stood at 9.8%, up from 9.6% in Q2 2024[7]. Credit Quality and Loss Provisions - Provision for credit losses rose to $645 million, an increase of 188% from Q2 2024 and 137% from Q3 2023[7]. - The allowance for loan losses increased to $(3,700) million in Q3 2023, compared to $(3,572) million in Q2 2023, an increase of $(128) million[9]. - The percentage of loans 30+ days delinquent decreased to 5.4% in Q3 2024 from 6.1% in Q2 2024, indicating improved loan performance[25]. Strategic Initiatives - Ally Financial plans to expand its mortgage finance segment, targeting a 20% growth in originations by the end of 2025[1]. - The company is pursuing strategic partnerships to enhance its product offerings, with a focus on technology-driven solutions[1]. - The company plans to continue focusing on market expansion and new product development to drive future growth[26]. Operational Efficiency - The efficiency ratio improved to 58.3%, down from 64.3% in Q2 2024[7]. - Adjusted efficiency ratio improved to 52.1%, down from 53.2% in the previous quarter, indicating enhanced operational efficiency[31].

Core Viewpoint - Ally Financial Inc. reported its third quarter 2024 results, highlighting its performance and future outlook [1]. Group 1: Company Overview - Ally Financial Inc. is a financial services company with the largest all-digital bank in the nation and a leading auto financing business [3]. - The company serves approximately 11 million customers through a comprehensive range of online banking services, including deposits, mortgage, and credit card products, as well as securities brokerage and investment advisory services [3]. Group 2: Conference Call Information - A conference call will be held at 9 a.m. ET to review the company's performance, including a results overview and a question and answer session [1]. - Participation in the conference call is available via webcast or dial-in, with pre-registration required for dial-in access [2].

Group 1 - Ally Financial Inc. (ALLY) is a digital financial-services company with a Zacks Consensus Estimate for its current year earnings revised downward by 21.9% over the last 60 days [1] - ArcBest Corporation (ARCB) is a freight transportation and integrated logistics services company, experiencing a 5.6% downward revision in its current year earnings estimate over the last 60 days [1] - The Boeing Company (BA), the largest aerospace company in the world, has seen its current year earnings estimate revised downward by 142.5% over the last 60 days [1]

Core Viewpoint - Ally Financial is expected to report disappointing third-quarter results, with earnings estimates revised downwards due to increased provisions for loan losses and declining net financing revenues [1][9][17]. Financial Performance - Ally Financial's second-quarter performance showed a 5% year-over-year decline in net financing revenues, primarily due to higher funding and deposit costs [1]. - The consensus estimate for third-quarter earnings is 55 cents, reflecting a 33.7% decrease from the same quarter last year [1]. - The expected net financing revenues for the third quarter are pegged at $1.5 billion, indicating a 1.8% year-over-year decline [5]. Revenue Estimates - The consensus estimate for total sales is $2.06 billion, suggesting a 4.8% growth [4]. - Other revenues, including insurance premiums and service revenues, are estimated to rise by 7.6% to $344.4 million [6]. - The net gain on mortgage and automotive loans is expected to surge by 42.8% to $5.7 million [6]. Expense Trends - Non-interest expenses are projected to rise by 5% year-over-year to $1.29 billion, driven by ongoing product launches and expansion efforts [7]. Asset Quality Concerns - The asset quality of Ally Financial is expected to deteriorate, with increased delinquencies and net charge-offs in the retail auto loan segment [7][8]. - The provision for loan losses is anticipated to increase by 16% year-over-year to $589.2 million [9]. Market Position and Valuation - Ally Financial's stock has declined by 10.2% in the third quarter, contrasting with a 6.2% increase in the industry [11]. - The stock is currently trading at a price-to-tangible book ratio of 0.94X, below the industry average of 1.28X [12]. Strategic Outlook - The company is diversifying into other businesses, including mortgage and wealth management, and has launched an AI platform to enhance operations [15]. - Despite potential benefits from lower interest rates, the current economic challenges and deteriorating asset quality pose significant risks to profitability [16][17].

Core Viewpoint - Analysts forecast a decline in Ally Financial's quarterly earnings per share (EPS) by 33.7% year-over-year, with an expected EPS of $0.55, while revenues are anticipated to increase by 4.8% to $2.06 billion [1] Earnings Estimates - The consensus EPS estimate has been revised downward by 14.8% over the past 30 days, indicating a reassessment by analysts [1] - The 'Gain on mortgage and automotive loans, net' is projected to reach $5.71 million, reflecting a year-over-year increase of 42.8% [2] - 'Net financing revenue' is expected to be $1.51 billion, showing a decrease of 1.8% from the previous year [2] - 'Total other revenue' is forecasted to be $552.07 million, indicating a year-over-year increase of 26.9% [2] Revenue and Income Metrics - 'Insurance premiums and service revenue earned' is estimated at $344.37 million, representing a year-over-year increase of 7.6% [3] - 'Total financing revenue and other interest income' is projected to be $3.61 billion, reflecting a slight increase of 0.5% from the previous year [3] - 'Other income, net of losses' is expected to be $158.44 million, indicating a year-over-year increase of 4.2% [3] Financial Ratios and Asset Metrics - The consensus estimate for 'Net interest margin (as reported)' is 3.3%, up from 3.2% in the same quarter last year [3] - The 'Efficiency Ratio' is expected to be 58.5%, improved from 62.6% in the same quarter last year [3] - 'Total interest-earning assets (Average Balances)' are projected to be $183.70 billion, down from $187.92 billion year-over-year [4] - 'Non-performing loans (NPLs)' are expected to be $1.23 billion, a decrease from $1.50 billion in the previous year [4] - The 'Total Capital Ratio' is projected at 12.6%, slightly up from 12.5% year-over-year [4] - 'Tier 1 Capital Ratio' is expected to be 10.9%, compared to 10.7% in the same quarter last year [4] Stock Performance - Ally Financial shares have increased by 8.4% over the past month, outperforming the Zacks S&P 500 composite's increase of 4.3% [4]

Group 1 - Ally Financial (ALLY) has been added to the Zacks Rank 5 (Strong Sell) List, with a downward revision of 18.2% in the Zacks Consensus Estimate for its current year earnings over the last 60 days [1] - Avis Budget Group (CAR) is also on the Zacks Rank 5 (Strong Sell) List, experiencing a 12.7% downward revision in the Zacks Consensus Estimate for its current year earnings over the last 60 days [1] - DNOW INC (DNOW) has been included in the Zacks Rank 5 (Strong Sell) List, with a 9.5% downward revision in the Zacks Consensus Estimate for its current year earnings over the last 60 days [1]

Group 1: Ally Financial - Ally Financial is the largest all-digital bank in the U.S. and the top prime auto lender, making it the 23rd-largest U.S. bank by assets [2] - The recent Federal Reserve interest rate cuts are favorable for banks, including Ally, which could lead to a recovery in its stock price [2][3] - Ally's current dividend yield is 3.4%, which is higher than most larger banks, providing an attractive passive income opportunity [3][4] Group 2: Prudential Financial - Prudential has evolved into a full-scale wealth management company, with its U.S. retirement strategies business up 67% year-to-date and private alternative capital deployment up 35% [5][6] - The company manages $1.5 trillion in assets and has a solid financial position, serving 50 million customers in 50 countries [6] - Prudential's dividend has increased by 30% over the past five years, yielding 4.3% at the current price, which is more than three times the average S&P 500 yield [7]

Group 1 - Ally Financial (ALLY) is a diversified financial services company with a 15.4% downward revision in the Zacks Consensus Estimate for its current year earnings over the last 60 days [1] - BHP Group Limited (BHP) is one of the world's largest diversified resource companies, experiencing a 6.5% downward revision in the Zacks Consensus Estimate for its current year earnings over the last 60 days [1] - Dine Brands Global (DIN) operates and franchises restaurants under the Applebee's and IHOP brands, with a nearly 4.9% downward revision in the Zacks Consensus Estimate for its current year earnings over the last 60 days [1]

Core Viewpoint - Ally Financial (ALLY) stock experienced a significant decline of 17.1% on September 10 due to a severe credit warning, but managed to recover to a 3.2% loss by the end of the month, and was subsequently added to Citi's Focus List as a top pick [1] Group 1: Stock Performance - After the initial drop, Ally's stock has shown a historically bullish signal, with a potential average increase of 6.7% over the next month when trading within one standard deviation of its 320-day moving average [1] - The stock is currently trading well below its year-to-date high of $45.46, and is just below its 2024 breakeven level, but has increased by 30.1% over the last 12 months [2] Group 2: Analyst Sentiment - Analysts believe that Ally is well-positioned to benefit from improving credit conditions and an expanding net interest margin (NIM) [1] - There is a prevailing pessimism among analysts, with 10 out of 19 covering brokerages recommending a "hold" or worse rating, indicating potential for unwinding of this sentiment to provide tailwinds for the stock [2]