Full-Year 2023 Results    

    Fourth Quarter 2023 Results    

•  Reached agreement to sell Ally Lending; CET1 benefit of ~15 bps at closing in 1Q ‘24, and accretive to EPS and tangible book value

•  Deconsolidated $1.7 billion of seasoned retail auto loans generating 9 bps of CET1 benefit

•  Headcount actions announced in 3Q have been realized, driving $80 million of annualized expense savings

•  FDIC special assessment fee of $38 million, among the lowest in the industry given the composition of the deposit base

•  EPS of $2.98; Adjusted EPS¹ of $3.05

•  Total Net Revenue of $8.2 billion; Adjusted Total Net Revenue¹ of $8.2 billion

•  Pre-Provision Net Revenue¹ of $3.1 billion; Core Pre-Provision Net Revenue¹ of $3.2 billion

•  Established leader in dealer financial services offering comprehensive suite of auto finance and insurance products

–   13.8 million consumer auto applications driving $40.0 billion origination volume

–   Retail auto originated yield¹ of 10.7% with nearly 40% of originated volume within highest credit quality tier

–   177 bps full-year retail auto net charge-offs, in-line with full-year guidance

–   Insurance earned premiums of $1.3 billion, highest since IPO

•  Leading, digital-first Ally Bank platform generated strong growth across consumer and commercial product suite

–   Retail deposits of $142.3 billion from 3.0 million retail deposit customers  |  $155 billion total deposits

–   1.2 million active credit cardholders; balanced approach to growth with compelling return profile

–   Corporate Finance HFI loan portfolio of $10.9 billion  |  25% ROE in 2023, with less than 1% of loans in nonaccrual status

•  Earnings per share (EPS) of $0.16; Adjusted EPS¹ of $0.45

•  Total Net Revenue of $2.1 billion; Adjusted Total Net Revenue¹ of $2.0 billion

•  Pre-Provision Net Revenue¹ of $0.7 billion; Core Pre-Provision Net Revenue¹ of $0.8 billion

•  Consumer auto originations of $9.6 billion  |  Estimated retail auto originated yield¹ of 10.81%, h124 bps YoY

•  Retail deposit growth of $2.2 billion QoQ  |  Retail deposit net customer growth of 52 thousand

“In 2023, a year filled with unique challenges for the financial services industry, Ally demonstrated the strength and resolve that has made us an industry leading financial institution,” said Chief Executive Officer Jeffrey J. Brown. “While cognizant of the highly dynamic environment, we remain focused on building businesses that are resilient through all environments. We ended 2023 with growing momentum and remain positioned for long-term success.”

“At Ally Bank, we recognized our 15th consecutive year of retail deposit growth, now serving over three million deposit customers following record customer growth in 2023. Integration of Credit Card within OneAlly further enhanced the seamless experience we aim to provide our customers. Corporate Finance delivered another year of solid performance, including $307 million of pre-tax income, the highest since our IPO.”

“Dealer financial services continues to capitalize on its competitive advantage, decisioning a record 13.8 million consumer applications which enabled $40 billion of consumer auto originations. Nearly 40% of our retail auto originations were made up of the highest credit quality tier at an estimated originated yield of 10.7%, demonstrating our ability to quickly adapt to changing origination environments while prioritizing risk-adjusted returns. Within Insurance, earned premiums of $1.3 billion were the highest since our IPO and we see opportunities for continued growth as we leverage synergies with Auto Finance.”

“Disciplined capital management remains paramount in navigating the current operating environment and we executed several strategic capital management actions in the fourth quarter. We recently reached an agreement to sell Ally Lending which upon closing is expected to be an approximately 15 basis point benefit to CET1 and modestly accretive to earnings per share and tangible book value. These actions are a continuation of our strategic priorities to invest resources in growing scale businesses and strengthening relationships with consumer and dealer customers.”

“Looking forward to 2024, I know that Ally will remain true to the “Do It Right” culture that we have built. As my time at Ally comes to a close, I must reiterate my pride in our achievements over the past 15 years and am excited to see what the future holds for this outstanding organization. I have the utmost confidence in this board, team, and their ability to execute against the strategic priorities that have served us well for many years and that will continue driving long-term value to all stakeholders in the years ahead.”

    Fourth Quarter  and Full-Year 2023 Financial Results    

(a) Net Financing Revenue

Core OID¹

Net Financing Revenue (excluding Core OID)¹

(b) Other Revenue

Change in Fair Value of Equity Securities²

Adjusted Other Revenue¹

(c) Provision for Credit Losses

Repositioning³

Adjusted Provision for Credit Losses¹

(d) Noninterest Expense

Repositioning³

Noninterest Expense (excluding Repositioning)¹

Pre-Tax Income (a+b-c-d)

Income Tax Expense

Net Loss from Discontinued Operations

Net Income

Preferred Dividends

Net Income Attributable to Common Shareholders

GAAP EPS (diluted)

Core OID, Net of Tax¹

Change in Fair Value of Equity Securities, Net of Tax³

Repositioning, Discontinued Ops., and Other, Net of Tax³

Significant Discrete Tax Items

Adjusted EPS¹

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.

Impacts the Insurance, Corporate Finance and Corporate and Other segments. The change reflects fair value adjustments to equity securities that are reported at fair value. Management believes the change in fair value of equity securities should be removed from select financial measures because it enables the reader to better understand the business’ ongoing ability to generate revenue and income.

Contains non-GAAP financial measures and other financial measures. See pages 6 and 7 for definitions.

Fourth Quarter

Net income attributable to common shareholders decreased $202 million versus the prior-year quarter to $49 million due to higher provision expense from continued credit normalization and higher noninterest expense caused in part by a write down of goodwill related to the pending sale of Ally Lending and the FDIC special assessment incurred during the quarter.

Net financing revenue decreased $181 million versus the prior-year quarter as a result of higher funding costs partially offset by continued expansion of earning asset yields and balance sheet optimization.

Other revenue increased $47 million versus the prior-year quarter, including a $74 million increase in the fair value of equity securities in the quarter, compared to a $49 million increase in the fair value of equity securities in the prior-year quarter. Other revenue, excluding the change in fair value of equity securities^A, increased $22 million YoY primarily driven by continued momentum across our diversified portfolio of products.

Fourth quarter NIM of 3.17%, including Core OID^B of 3 bps, decreased 48 bps YoY. Excluding Core OID^B, NIM 3.20%, was also down 48 bps YoY given higher funding costs due to the elevated rate environment, which was offset in part by higher retail auto and floating rate asset yields.

Provision for credit losses increased $97 million to $587 million compared to the prior-year quarter due to continued normalization in credit, partially offset by a release due to the pending sale of Ally Lending.

Noninterest expense increased $150 million YoY primarily due to the write-down of goodwill associated with the pending sale of Ally Lending and the special assessment from the FDIC.

Full-Year 2023

Net income attributable to common shareholders was $910 million in 2023, compared to $1.6 billion in 2022, due to lower net financing revenue, higher noninterest expense, and increased provision expense from credit normalization.

Net financing revenue declined to $6.2 billion, down $649 million from the prior year, driven by higher funding costs, partially offset by expanding earning asset yields.

Full year NIM was 3.32%, including Core OID^B of 3 bps, down 53 bps YoY. Excluding Core OID^B, NIM was 3.35%, down 53 bps YoY.

Other revenue was up $435 million YoY, including a $107 million increase in the fair value of equity securities in the year, compared to a $215 million decrease in the fair value of equity securities in 2022. Other revenue, excluding the impact of the change in fair value of equity securities^A, was up $113 million to $1.9 billion, reflecting continued momentum across our diverse portfolio of products.

Provision for credit losses increased $569 million from the prior year, due to higher net charge-offs driven by credit normalization, partially offset by lower asset growth across our portfolio as compared to the year prior.

Noninterest expense increased $476 million from the prior year, largely due to factors previously mentioned.

    Pre-Tax Income by Segment    

    ($ millions)

    Automotive Finance

    Insurance

        Dealer Financial Services

    Corporate Finance

    Mortgage Finance

    Corporate and Other

  Pre-Tax Income from Continuing Operations

    Core OID¹

    Change in Fair Value of Equity Securities²

    Repositioning³

  Core Pre-Tax Income¹

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.

Change in fair value of equity securities primarily impacts the Insurance, Corporate Finance, and Corporate and Other segments. Reflects equity fair value adjustments which requires change in the fair value of equity securities to be recognized in current period net income.

Contains non-GAAP financial measures and other financial measures. See pages 6 and 7 for definitions.

Auto Finance

Pre-tax income in the fourth quarter of $294 million was down $143 million versus the prior-year quarter primarily driven by higher provision expense.

Net financing revenue of $1.3 billion was up $5 million YoY as higher portfolio yield more than offset higher funding costs. Ally’s retail auto portfolio yield, excluding the impact of hedges, increased 106 bps YoY to 8.43% in the fourth quarter as the portfolio continues to turn over and benefit from higher yielding originations.

Provision for credit losses totaled $492 million, up $116 million YoY, due to higher retail auto net charge-offs as credit normalizes. The fourth quarter retail auto net charge-off rate of 2.21% increased 55 bps YoY, with the pace of increase moderating in each quarter of 2023 as front-book vintages season.

Consumer auto originations in the fourth quarter increased to $9.6 billion from $9.2 billion in the prior-year period, which included $6.2 billion of used retail volume, or 65% of total originations, $2.7 billion of new retail volume, and $0.6 billion of leases. Estimated retail auto originated yield^C in the quarter was 10.81%.

Full-year 2023 pre-tax income of $1.6 billion was down $0.6 billion due to higher provision for credit losses and higher noninterest expense, partially offset by higher net financing revenue.

Consumer originations decreased $6.4 billion in 2023 to $40.0 billion, with used volume of $25.8 billion, or 65% of total 2023 originations, $11.3 billion of new retail volume and $2.9 billion of leases. Estimated retail auto originated yield^C was 10.69% in 2023 compared to 8.24% in 2022 as benchmark rates increased and record application flow enabled strong pricing and selective underwriting.

End-of-period auto earning assets increased $3.8 billion YoY from $113.1 billion to $116.9 billion primarily due to an increase in commercial auto earning assets as well as a modest increase in retail assets, partially offset by a decline in lease assets and retail loan deconsolidation. End-of-period consumer auto earning assets were down $0.8 billion YoY, driven by lower lease assets. End-of-period commercial earning assets of $23.3 billion were up $4.6 billion YoY due to industry-wide new vehicle inventory supply and higher dealer loans, partially offset by a decrease in used vehicle supply.

Insurance

Pre-tax income in the fourth quarter of $129 million increased $28 million versus the prior-year period. Results reflect a $67 million increase in the fair value of equity securities^D during the fourth quarter compared to a $49 million increase in the fair value of equity securities^D in the prior year period. Core pre-tax income^E was $62 million in the quarter, up $10 million YoY primarily driven by elevated earned premiums, partially offset by higher losses driven by P&C portfolio growth and higher insured values, higher weather losses, and GAP loss normalization from lower vehicle values.

Quarterly written premiums were $333 million, up $48 million YoY, driven by P&C premiums from growing dealer inventory levels, growth in other dealer products, as well as F&I growth driven by higher volume in Canada and other U.S. ancillary products. Total investment income was $44 million, up $11 million YoY, excluding a $67 million increase in the fair value of equity securities^D during the quarter, driven by an increase in realized investment gains during the period.

The full-year 2023 pre-tax income of $213 million was up $251 million versus the prior year primarily due to the increase in the fair value of equity securities during the year. Core pre-tax income^E for 2023 was $103 million, down $68 million from 2022 as higher earned premiums were more than offset by higher losses driven by P&C portfolio growth and higher insured values, higher weather losses, and GAP loss normalization from lower vehicle values.

Corporate Finance

Pre-tax income was $79 million in the quarter, up $12 million YoY, primarily driven by higher net financing revenue and lower noninterest expense.

Net financing revenue increased $11 million YoY to $105 million, primarily due to higher loan balances. Interest revenue benefited from increased yields on the entirely floating rate asset portfolio. Other revenue of $23 million was down $2 million year over year. The HFI loan portfolio increased 7% YoY from $10.1 billion to $10.9 billion. Non-accrual loans comprise less than 1% of the portfolio while criticized assets make up approximately 10%.

Provision for credit losses remained relatively flat to the prior year period at $17 million.

Full-year 2023 pre-tax income of $307 million was the highest since our IPO, up $25 million YoY as higher revenues were partially offset by increased provision and noninterest expense in line with higher asset balances.

Mortgage Finance

Fourth quarter pre-tax income was $24 million, up $5 million YoY driven by lower noninterest expense reflecting the benefit of the variable cost direct-to-consumer partnership model.

Net financing revenue in the quarter was down $4 million YoY to $51 million, reflecting lower asset balances combined with higher cost of funds.

Other revenue remained relatively flat YoY increasing from $1 million to $3 million.

Full-year 2023 pre-tax income was $92 million, up $37 million from 2022, driven primarily by lower noninterest expense due to the previously mentioned variable cost structure.

DTC originations totaled $1.0 billion in 2023, down $2.3 billion YoY, reflective of industry contraction along with Ally’s continued focus on customer experience and operational efficiency.

Capital, Liquidity & Funding, and Deposits

Capital

During 2023, Ally paid four quarterly common dividends totaling $1.20 per share, which was unchanged YoY. Ally’s Board of Directors approved another $0.30 per share common dividend for the first quarter of 2024. Ally did not repurchase any shares on the open market during 2023.

Ally’s Common Equity Tier 1 capital ratio increased slightly year over year, ending the year at 9.4%. Risk weighted assets increased from $157 billion to $162 billion, reflective of our commitment to prudent capital management while continuing to invest in our highest returning businesses.

Liquidity & Funding

Liquid cash and cash equivalents ^F totaled $6.5 billion at quarter-end, down $1.5 billion compared to the end of the third quarter. Highly liquid securities were $20.6 billion and unused pledged borrowing capacity at the FHLB and FRB was $10.3 billion and $26 billion, respectively, at quarter-end. Total current available liquidity^G was $63.5 billion at year-end, equal to 5.5x uninsured deposit balances.

Deposits represented 88% of Ally’s funding portfolio at year-end, which is unchanged from the year prior.

Deposits

Retail deposits increased to $142.3 billion at quarter-end, up $4.6 billion YoY and up $2.2 billion for the quarter. Total deposits increased to $154.7 billion at year-end, up $2.4 billion YoY, and Ally maintained industry-leading customer retention at 97%.

The average retail portfolio deposit rate was 4.15% for the quarter, up 170 bps YoY and up 15 bps QoQ.

Ally experienced the best retail deposit customer growth in our history with 359 thousand net new customers during the year, exceeding 3 million customers, and up 13% YoY. Millennials and younger generations continue to comprise the largest segment of new customers, accounting for nearly three-quarters of new customers in the fourth quarter. At the end of the fourth quarter, 10% of Ally’s deposit customers utilized multiple Ally products.

Definitions of Non-GAAP Financial  Measures and Other Key Terms  

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, tax-effected repositioning and other which are primarily related to the extinguishment of high-cost legacy debt, strategic activities and significant other one-time items, change in fair value of equity securities, significant discrete tax items, and preferred stock capital actions, as applicable for respective periods.

In the denominator, GAAP shareholder’s equity is adjusted for goodwill and identifiable intangibles net of DTL, Core OID balance, and net DTA.

Reconciliation to GAAP

Adjusted Earnings per Share

GAAP Net Income Attributable to Common Shareholders

Discontinued Operations, Net of Tax

Core OID

Repositioning and Other

Change in the Fair Value of Equity Securities

Tax on: Core OID & Change in Fair Value of Equity Securities (21% tax rate)

Significant Discrete Tax Items

Core Net Income Attributable to Common Shareholders

Denominator

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

Adjusted EPS

Core Return on Tangible Common Equity (ROTCE)

GAAP Net Income Attributable to Common Shareholders

Discontinued Operations, Net of Tax

Core OID

Repositioning and Other

Change in Fair Value of Equity Securities

Tax on: Core OID & Change in Fair Value of Equity Securities (21% tax rate)

Significant Discrete Tax Items

Core Net Income Attributable to Common Shareholders

Denominator (Average, $ millions)

GAAP Shareholder’s Equity

Preferred Equity

GAAP Common Shareholder’s Equity

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

Tangible Common Equity

Core OID Balance

Net Deferred Tax Asset (DTA)

Normalized Common Equity

Core Return on Tangible Common Equity

Adjusted Tangible Book Value per Share

GAAP Shareholder’s Equity

Preferred Equity

GAAP Common Shareholder’s Equity

Goodwill and Identifiable Intangible Assets, Net of DTLs

Tangible Common Equity

Tax-effected Core OID Balance (21% tax rate)

Adjusted Tangible Book Value

Denominator

Issued Shares Outstanding (period-end, thousands)

Metric

GAAP Shareholder’s Equity per Share

Preferred Equity per Share

GAAP Common Shareholder’s Equity per Share

Goodwill and Identifiable Intangible Assets, Net of DTLs per Share

Tangible Common Equity per Share

Tax-effected Core OID Balance (21% tax rate) per Share

Adjusted Tangible Book Value per Share

Adjusted Efficiency Ratio

GAAP Noninterest Expense

Insurance Expense

Repositioning and Other

Adjusted Noninterest Expense for Adjusted Efficiency Ratio

Denominator ($ millions)

Total Net Revenue

Core OID

Insurance Revenue

Adjusted Net Revenue for Adjusted Efficiency Ratio

Adjusted Efficiency Ratio

Original Issue Discount Amortization Expense ($ millions)

GAAP Original Issue Discount Amortization Expense

Other OID

Core Original Issue Discount (Core OID) Amortization Expense (excl. accelerated OID)

Outstanding Original Issue Discount Balance ($ millions)

GAAP Outstanding Original Issue Discount Balance

Other Outstanding OID Balance

Core Outstanding Original Issue Discount Balance (Core OID Balance)

GAAP Net Financing Revenue

Core OID

Net Financing Revenue (ex. Core OID)

GAAP Other Revenue

Change in Fair Value of Equity Securities

Adjusted Other Revenue

Adjusted Total Net Revenue

GAAP Provision for Credit Losses

Repositioning

Adjusted Provision for Credit Losses

GAAP Noninterest Expense

Repositioning

Adjusted NIE (Excluding Repositioning)

Pre-Tax Income

Core Pre-Tax Income

Pre-Provision Net Revenue

Core Pre-Provision Net Revenue

equity

securities

equity

securities

Insurance

Premiums, Service Revenue Earned and Other

Losses and Loss Adjustment Expenses

Acquisition and Underwriting Expenses

Investment Income and Other

Pre-Tax Income from Continuing Operations