ALLY - Earnings call 3 2023 | Ally Financial Inc.

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Operator

Good day, and thank you for standing by. Welcome to the Ally Financial's Third Quarter 2023 Earnings Call. [Operator Instructions] Please be advised that today's conference is being recorded.

I would now like to hand the conference over to Sean Leary, Head of Investor Relations. Please go ahead.

Sean Leary

Carmen. you, Thank welcome Call. and Financial's Quarter Third Good to Earnings XXXX morning, Ally This our Brown; will Jeff morning, CEO, our and results taking review before CFO, questions. Ally's Hutchinson, Russ Investor reference found can The of presentation ally.com. on we'll the website, our Relations be section

language factor pertaining Slide Slide measures today's call our X. are on operating performance risk X. and are and GAAP statements governing Forward-looking results non-GAAP to on and capital

are and supplemental U.S. a can to not As core reminder, the for Definitions or a in GAAP found metrics measures. reconciliations non-GAAP be substitute and appendix.

over And with the turn that, I'll to call J.B.

Jeffrey Brown

you Thank results. us you, Sean. #X. Good morning. on begin review We quarter appreciate third joining our Slide to I'll

Before months. of leaving will get spend be the about to in that like a minutes next the I we Ally couple few quarter, last into I'd talking week's announcement

transformation, and me leadership restating by financial trust of nearly the strategic remarkable confidence incredible my to as thrive. foundation the our team and led and have teammates Ally flawlessly incredibly this positioning in built as years during and strong to deep start my to Let as during honored accomplished these we've some transition company well period. after company of I'm things has through is the the X CEO. delivered operational positioned an a and my execute

out TARP, publicly Crisis, returned X million finance We successfully bank transformed captive take U.S. the and largest brand. thought became came franchise, serving X Starting I a financial the into in the $XXX deposits, $XX Treasury basically traded funded of years. later, a to we've from company. a Financial the legacy capital GMAC X the investment-grade markets to would we automotive very XX X, grown with that I billion Great and in to special all-digital customers. restructuring country an leading help billion to Nearly the of years to coming company navigated

the consistently And served which and and the country, XXXX. dealers team Foundation the help businesses. set in to more live, offering them back than that insurance comprehensive across the we've of products given XX,XXX Charitable in work a Ally including their launch of services and auto we communities Our grow them

calls, many the of forward. proud said culture deliver the times to we along I've most this will to on all this way. stakeholders team these disrupt, going as drive and what continue built I'm our of But innovate is culture that value for Ally and It's

Ally is ever this several As innovation positioned we'll next cover company excited on difficult of chapter over thing to to but for do, the the years. customer. call, is Leaving and stronger perspective the and than of the a earnings evolution a growth today's substantial from next see time I'm

operational only think regulatory, Board or final I could Ally. my from the me it's over years. excites My Hendrick next leading very relationship state Group that there with our financial I This was really pulled Rick chapter transition or have family call as and was Automotive Hendrick, disagreement his for important the no to the concern. away XX-plus with me

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of and environment. to solid XX%, in quarter ROTCE #X And with $X.XX, Adjusted of revenues the reflect that, dynamic let's get turn EPS of a of another $X billion core into execution quarter. to Slide

reduction. highlight a items want impacting the do a recorded We the to charge few associated with notable quarter. $XX restructuring I million workforce

into as target. heading meeting million annualized our taken savings we've we manage actions in expense the expect $XX We drive towards next year will

benefits those with and we're evaluate allowance. we to the credits of ways monetize release to Additionally, some certain of to quarter tax this continue realize valuation able

also benefits changes. from law We realized state certain

an job years items done expect team tax we book has quarter, these to the While capital every identifying over occur value ways and the excellent accretion. don't to drive

provided share. GAAP $XX results, nonrecurring These and million or a included tax excluded adjusted $X.XX in core are per benefit items In but from them items ROTCE. aggregate, EPS we've

from credit yields to capitalize quarter tier for were as the million, quality we Moving continue billion results our performance, strong in within record we risk-adjusted while operational came on solid returns returns. volume the to company. of $XX.X highest Auto generated attractive application at of XX.X%, XX% Finance, originations this Originated of segment. to see volume Within across we resulted $X.X continue which our within

cumulative In us total, positions dealer well here. in our achieved from expansion for consistent reflects which Auto, now Retail to a engagement yield and XX% we've pricing of beta approach

in vintage details and in the terms flow-to-loss seasonality. were points, delinquencies, charge-offs in and with seeing of was what but typical will quarter credit into rates more on line which performance. XXX up go given about we feel guidance Net good we're basis Russ quarter-over-quarter shortly,

Within Insurance, premiums deepen and dealer earned since at our figure $XXX of successfully million we to relationships XXXX. continue highest grow was

of for resonating Total card XX,XXX long-term the opportunities quarter, are our in results consumers. providing XXX,XXX months. which retail holders brand to in year-over-year. million completed and up be One another on a customers now serving experience X deposits with credit million X.X of business, that deposit continue in the Ally customers, billion proof $XXX launch We're basis, the Ally billion will a to Bank. record. coming year-to-date the $X.X Turning Ally We point represent an added active is

$XX.X in billion Corporate Finance lien first of disciplined continues position. growth deliver is to accretive, XXX% a as nearly portfolio the

navigating an the address from ] hedging rate challenges have the throughout we've in Slide the the investors. impact that [ been interest active including an wanted scenarios. also businesses items what's From to the critical strong of on and talked pricing top rate rising sides processes, of directly rate of We've we soften we're Operationally, balance quarters managing multiple rapidly perspective, to disciplined for of about higher-for-longer our mind both the some environment. a cycle, program On for #X, sheet. leveraged ALCO financial near-term

balance segments the on for Retail stabilize. and the underperforming box have margin in which We've in line significant top year, price, managing X.X% pressure, ] to asset a added sheet priority. buy particularly Beyond eliminate see the refined January. Actively rates riskier the for Based compensate NCOs to well remains volatility. of we the today, we segments, expect side where of in we [ provided our credit full on is when with range potential expansion risk we'd for things us the momentum positions Auto near-term

unemployment where This is a low. historically unique environment remains

our for strong. we but remain a watch step of of we technology Delinquencies another meaningful data in within we've in made challenging consistent item, vehicle teams science solid prior guidance, investments shallowing to and a quarter assume and a is terms will values inflation used for challenge environment. change, down many loss The a in persistent drive with remain And year-over-year performance and consumers. remainder servicing flow rates year. saw the the collections However, in of even

We get in current consumer have consumers understanding patterns cars. to more and options payment a their and staying of much deeper

pressure, revenue expenses. heightened we near-term the on Given our focus further

pages. roughly path for growth XXXX, expense I'll making total we'll more and X% basis. details see less than on that continue to controllable share X% a a investments Looking a prudent few expense in

capital recent and months regulatory liquidity proposals released industry. are continue the increased across in to On front, we and for the preparing evaluate the

However, believe implications fully we these we are partners. should and closely that and working advocacy the study other proposals, of BPI regulators with

various to We across will optimize risk-adjusted capital continue returns. our to be businesses disciplined in allocating

had we've scale success creating and the shows engaged #X with Slide Ally across deepening relationships customers. Bank

customers granular, and is held are XXX,XXX now an balances. insured. we maintain As is FDIC of have balances deposit Ally. experience growth relationships at hold customers Ally portfolio mentioned, Customer billion year-to-date in who record, retention million of XX% to ability has retail our XX%, industry-leading X customer reflecting and steady $XXX The diversified, once

savings have than X that our a account. highlights Ally million tools, bottom deposit deposit checking offerings relationship. spending that either have customers. of our customers what grown the call an and Across we or our More also base population, page smart XX% led more than direct to The customer We've million engaged benefits of liquid X product and/or utilize Invest the an steadily half have key our savings leverage engagement. to how

multiproduct engagement is of consumer from bank adoption the customers consistent we've The across Card. approaching deposit customers seen benefit as and meaningful. We're across XXX,XXX Invest, Home

an As don't. Invest who who also customers have relationship an example, Xx balance deposit have those a

within brand, Our hit the and offerings moving continue forward. bank the to consumer we digital the optimistic and mark, remain potential growth customer about experience

sources XX% beyond Moving to account available liquidity. and our importantly, of we deposits. core they multiple Slide deposits snapshot have a current of with funding We've liquidity our funding, but as We're stack of for funded provided #X.

discount quality $XX.X our of meaningfully liquidity quarter show our balances. On within window increased the X.Xx at capacity available of liquidity. side, right uninsured we representing further to the deposit strengthen the We total the contingent billion,

We the contracts planning with all for pledged of through are being as process. The that available Auto first the at Federal Finance the discount of work importance engagement of events times. emphasized key time the we the and liquidity together at for appreciative and avenues Reserve March window again ensuring contingency multiple

is liquidity, relationship profile the our we loan The to other a stable of multiple mature maintain franchise, solid access with of a foundation and deposits consumer home funding bank. and including sources

to of summary environment. recently the #X changes how a about provides Slide thinking we're regulatory proposed

Basel III is Ally, in-game For impact OCI. most the the proposal the of of meaningful phase-in

a and we plays a natural portfolio annually expect OCI have reminder, accretion forward after assuming not $XXX reinvested tax of the the AFS in curve year As out. million in over around

confident depend at for not with these our in effectively lower requirements are all the our In the coordination risk of exposures, result debt will to addition increased on of I'm is the requirements make amount offset can Retail issues, optimize RWA, net in our portfolio. Policy parent our company. of we terms we advance material the would naturally peer bank weight all proposed proposed response, periods. proposed The liquidity including actively debt for a parent we Bank of Institute. long-term banks by to on The long-term including factors and positions. issuance incremental industry retail and implementation Auto changes On capital sits as Ally RWA as risk impact is issuance in build level operational several the engaged given

our in to but comfortable landscape given capital We and will our liquidity changes continue regulatory to needed, the the strong navigate position. ability as adapt feel and evaluate

Let's Slide about talk expense turn #XX our to outlook. to

on X% things we quarter X%. for growth commissions growth expenses and we we total fees to call, earnings are losses, insurance previewed expect the around factoring we committed second of and can When FDIC control. As the operating expense like

to the taken growth, reduce in and a mid-XXXX in actions freeze workforce expense have hiring weeks. over We past a specific reduction recent year including in

the be normalization consumer by taken keep weather It's impacted and little date, to total, anticipate In expenses still given in losses the losses. also year important we expect and right actions of XXXX XXXX billion, expense to rose billion. that this we $X we've $X.X around mind was a to over credit

million of So that growth of coming around $XXX with XX% noncontrollable in items. the form of

long the actions very continue fuel to to modest on to the growth and company taken driving focus are investments make for will continued We total. us the we've but right specific the efficiency term, in

it to turn through the I'll to over that, results. detailed go Russ financial With

Russell Hutchinson

the slides. within other come We'll on Thank comprised well NIM . Adjusted and few near-term million initiatives effectively begin reflecting modest and increased smart we're Good increased as continued XX. auction for quarter-over-quarter, our in for year-over-year, $X.X which rates us costs we the majority portfolio the a run the demonstrated while everyone. momentum funding million morning, is back quarterly sheet financing expansion at rate you, deposit pass-through $XXX $XXX insurance up quarter. ahead. of of of JB. revenue down products, partially year-over-year highlighted expansion. Net continue balance see the in given previously liquid strong mitigates consumer of Slide the pressure of compression driven billion alluded we've Auto to Despite we on business as Finance, pricing last to strong on asset revenue short-term and sets and NIM by investment a opportunities to side our was as I'll expansion our momentum gains,

relating granular build Provision on in within Noninterest to of volume reserve million and expense provide a growth. modest more up asset Finance quarter-over-quarter, of Auto were $XXX was reflecting $X.X guidance. shortly. Retail billion NCOs I'll reflects industry. the trends credit application expense seen costs seasonal repo with higher support prior line update higher Retail Auto costs across and a to

revenue beta achieve volume XX% expense pricing of driven the throughout enabled application The by drove our of but Record higher within flow. application significantly tightening Auto increased cycle. variable costs the Finance, pricing incremental the us has a nearly to marginal exceeds strength

also when and go on remain Ally. to to higher minimizing credit vehicles line We've We pricing from repossession. third-party impacts vendors losses focused bottom seen net

again growth headwinds, our take begin year-over-year these as hold. Despite the to initiatives in efficiency this expenses slowed quarter

our As J.B. on recent We've annualized $XX the savings to $XX to from interest for higher brought pretax rate have costs, which our reduce growth near-term by year-over-year restructuring in anticipated the reflects environment. excluded actions the million of next costs the million covered, headwinds called core position year, results. us ability revenue out and been navigate

capital but generation. for from were benefit We've adjusted benefits to EPS respectively. $X.XX, tax quarter of nice recurring the reflect and GAAP planning and these strategies excluded $X.XX a adjusted tax the are underlying better to results, EPS boost certain

basis Momentum asset deposit cost was rate the margin moved XX. Net as OSA within up XX the points the Moving continued by to yields of quarter in quarter-over-quarter. down but X.XX% earning was within offset Slide quarter. interest

billion we accretive loans focus average by on within year-over-year, billion of when leases returns reflects our commercial balances. auto risk-adjusted of retail up $X.X deployment and growth driven Total billion originating. as $XXX $X growth Quarter-over-quarter capital disciplined and were

the hedging the basis Earning discussed yield our quarter-over-quarter points increasing we've billion including higher-yielding basis X.XX% expansion, more portfolio from given and XXX across Auto and of $XX trends Retail contribution than loan points exposure increased asset rate impact yield assets XX previously, over of floating and commercial portfolios. year-over-year of cumulative

the this a portfolio. portion talk yield expand vintages dynamics later. retail comprise as larger to recent about more of continued portfolio yield I'll auto portfolio Retail quarter

given Commercial their rates rate portfolio benchmark expanded floating yields alongside nature.

have slowed liabilities. Competition remains both pricing increase, market quarter, approach the on and as rate of cycle. to continued to funds deposits basis relative but change the pricing. we to for a Turning of XQ of disciplined within the Cost remained but we tightening the increased and end on quarter-over-quarter intense, year-over-year

The themes of largely are NIM our trajectory unchanged.

followed a of by quarter of after quarters even We stabilize, rates couple expect benefit without each NIM expansion the trough cuts. to rate gradual

XX. to Moving Slide

approach increased Our quarter-over-quarter disciplined our to CETX ratio capital given to X.X% allocation.

we per of AFS shift forward given this ratio OCI quarter X.X% portfolio, on of as in long-term current we allow TCE to after-tax rates. curve, off. Our expect the the losses includes our accretion which the around Based million within year securities increased portfolio unrealized roll $XXX

assets billion. quarter, mentioned outlook exceed will and dividend for earlier, growth $X.XX comprised common by for is auto At We loan current we announced regulatory at primarily another the levels. of quarterly and fourth be attractive the as $X.X for minimum levels, risk-adjusted modest of our X% CETX

asset points prior trends. Let's seasonal turn quarter-over-quarter guidance increased given typical to with XX review net Retail of to X.X% in charge-offs Slide XXX to were Auto Consolidated charge-offs line points basis of basis X.X%. trends. net of quality XXX

values early delinquencies modestly see Severity offsetting of softer and reflecting We in slightly continue quarter, trends. favorable elevated used were to levels elevated impacts flow-to-loss that the in September. strengthened

Delinquencies assess decline. year comfortable change inflation, but of shortly. I'll Auto Retail quarter, to continue we continues the to and increase In the seasonally, the in remain but year-over-year impacts more delinquencies full increased right, will with guidance. in our XX-day fourth bottom cover the NCO detail credit seasonally

Slide XX to coverage reserve consolidated The X billion shows X. that $X.X balance and day X.XX%. $X.X CECL basis is quarter-over-quarter billion higher point was increased than relatively of flat total

beyond year reversion was seeing X% well coverage historical remains is X.XX% assumptions macro day methodology. at reaching to Retail mean Auto worsening CECL above under X. on unemployment increasing X.X% with the next employment and before conditions X.XX% Our our flat

under X lifetime coverage expected portfolio. of the Auto remaining have we average our weighted Retail of this years, losses portfolio The life remains reflecting for

and application to XX. approach, to coupling leveraging high dynamic go-to-market originate and remain what scale which we in significant selective Slide our touch, returns. us advantage. differentiated generated enables risk-adjusted continues We focused Turning competitive a tech flow has Record strong drive on high to and and be

$XX.X bottom assets despite tighter the underwriting in criteria. application Originations Auto. the generate slightly to the franchise in and as up volume right the of modest of on the demonstrates increased Retail top scale gradually were given growth alongside we're volume of Ending able our page balances compelling quarter-over-quarter commercial billion

slightly year $XX Given above consumer year-to-date billion, volumes total in around originate originations. we on to this billion remain track $XX

XX% retail our comprised again new highlights than quarter-over-quarter in production. modestly of the quarter. and less vehicle industry used ability Additionally, XX% up originations disruptions to was in Nonprime originations, represents navigate which of

application within optimizing of at billion XX.X% Accessing Let's trucks billion but highest We criteria in encourage move XX% and as estimated dealers we to loan Retail tier. year, potential all side, around applications book billion send work in consumer in yield our on XX.X loans $XX that million the Slide $XX XX cars what will application in with us an credit is of many that to the to conditions, applications scale terms incremental million and choose of dealer like be our our to us track result By talk Auto on them originate we And simply, attractive pricing. we volume. on scale Put goal franchise. about to volume, as volume. in volume volume, super are became increased is credit to volume means strong we selective changing or our loan more prime our Increased auto adapt relationships volume of our quickly scale sell their application enables This a possible. did customers. unique XX.X with and to year. decision market us cost -- and and in $XXX of earlier returns beneficial when this help allows to to approximately mutually

very booking strong pivot mix give confidence to yields. and the more you also should our to credit ability continue Our ability down in up

platform allocation the forward, to within our business. auto leverage capital Going our we'll optimize to continue

Throughout both on Auto pricing cycle, with we've sheet, the Slide highlights and Retail which in XX%. strong this around balance to embedded Let's sides our XX% tightening beta tailwinds beta a demonstrated XX, of deposits around Auto portfolio. our move Retail

pricing portfolio majority or is strong, year. yielding X% portfolio of origination While the of the XX% Only the been was originated has less. this

to runoff drives current originations today's our vintages of natural class. we asset originate by the As pricing, loans expansion lower-yielding at replaced being continue on yield largest

originated expansion projected in revenue On X.X% turnover the stable to drive term. $XX that in and portfolio yields, portfolio, an a growth over the yield Assuming medium meaningful XX% XXXX is drives to billion XXXX.

originations yield the and over couple increase Obviously, eventual will the our years. the retail But path of of next will mix portfolio confident we the meaningfully yields impact rates interest credit of remain migration.

context Slide as well to On Auto XX, fourth the quarter. our we credit provide date for around Retail outlook trends as

As we expectations. the quarter ended X.XX%, noted NCOs with in previously, with of line

of Additionally, the drivers losses are calls. year for track outlook we've performance of recent with on what full earnings X.X%. remains on The shared consistent

have delinquency strategic levels been flow-to-loss pre-pandemic but elevated will performance and monitor year, content. importantly, improving trends last to encouraging. loans portfolio remain have rates the below trends they as levels Loans and reduce vintage continue We ultimately shift quality and credit consistent year, been higher which loss this into throughout season show year originated been well have our

left, which and used bottom quarter rate results quarterly we a around expectation of support next loss the full the expect the X.X%. values the expectations loss on year of loss cover we've end bottom provided page. from in fourth the On strike, again I'll UAW lowered our given We've

in On row. for the we which XX-day year-over-year again quarter bottom declined rates, show the a change right, delinquency third has the in

relative in used view provides in flat of values following third year-end given a has which quarter. XX to XXXX latest Slide X% year-to-date, vehicle decline resulted values the our performance

declines, support We the for values but term. and to our expected conservative is provide for continue maintain longer-term strike to outlook UAW further near embed used outlook a

strike a business. well. decline full in would support a We thereby, [indiscernible] elongated and X% near-term basis are also but for values, create the forecasting and, could quarter a balances An fourth insurance vehicle year used as pressure on currently our

the impact is overall. immaterial So net P&L

strength and results. repo elevated support move $XXX to and higher industry pricing seasonality Let's just expense. typical and we the the Provision scale Slide Pretax auto requisite reflected while momentum spend million to of of noninterest provision the XX result segment to cover costs expenses were reflected alongside across highlighted. income

yields, highlighted earning we've the Despite On the recent progression more up the below the XXX bottom portfolio progression prospective in portfolio again year-over-year. yield, tailwinds well basis than highlighting assets. to originated points consistent date, once was to the left, still

trends. given assess impact lead the year-over-year, lessee The declined bottom chart we from but elevated strike to Gains right portfolio and UAW tighter lease in but lessee net favorable the dealer And values are quarter-over-quarter, near-term buyouts. could the and were continue supported, summarizes buyouts. as decline used to supply dealer

still to in Slide XXXX. weather revenue prior the since XX. pretax by earned XXXX, but income Insurance premium have year. was The activity highest headwind million Core favorability of capped seen severe the the Turning loss we a our the in $XX partially result given elevated offset since reinsurance of given highest activity on weather exposure, place was

to time takes are hail one's was dealers previous coordination. was move wind Our Initial challenges our little Named the still losses that The display the inventory, property losses the a with losses on to dealers proactive again and in lot for incur of estimates but and storm. exceeds warning, But actions, $X.X quarter. encountered we from quarter. the mitigate what with violent billion. didn't more storms engagement storms was third gives Idalia Hurricane in faced this the given from any often

increased normalizing levels. benefit on dealer increasing $XXX year-over-year of from premiums million Written remained XX% relationships as focused we inventory and

across remains focus driving auto Finance insurance spectrum leveraging highlighting on integration our the dealer scale established base. within our full further Auto dealers, of to and we've Our suite product

Turning and of $XXX increased to Total and $X.X of deposits billion up demonstrating strength of year-over-year. quarter-over-quarter resilience the $XXX Retail $X year-over-year, leading Slide were deposits billion billion franchise. billion XX. our billion $X.X

the growth savings The And become history which to year-to-date annual highest multiproduct Bank's migration for has aware evolution growth the in the their across customer track customers is on by several as the Ally customers, and XXX,XXX annually growth. the years. customers the XXXX XXth see offerings quarter past our grown of over provides towards on XX,XXX beyond base continued customer history. growth in preferences rates. Bank's continue suite. more and net Ally new driving And XX% customer is and Ally consecutive our a highest was increasingly product for of of to growth opportunity of the strong tailwind digital provides in consumer continued value we entirety earn

Moving to Slide XX.

diversification the Invest customers Our well deepen deposit of as of customer they openings complements and XX% Ally movement franchise from relationships. we again leverage provide between money digital within ease as accounts bank once account saw Ally. platforms existing the new

in Credit prudently Card to quarter, One Ally Ally and accelerate of new capital added lending the launch Ally the to and grow quarter XX,XXX the suite. disciplined allocation. cardholders given now ability X.X our relatively portfolio. relationships in million approach flat we underwriting were fourth balances strong as product continued integration across will deepen our Ally's The

repeat, growth. in an Core quarter-over-quarter, Slide gain was year-over-year benefiting as first asset lien remains rates down rate. offset $XX largely given a asset results from pretax high on and of the up accretive income position. are Finance are loans of not slightly The period $XX was portfolio but the Corporate year was higher prior The portfolio XX% XXX% million in interest comparison is million did investment with based disciplined XX. by quality entire floating

portfolio focus reflecting HFI modest team's billion shows on the risk-adjusted balance Our maximizing returns. discipline $XX.X of growth and

our came Ally from customers, focused of variable specific experience a More income pretax Finance. were of for and partner origination. Mortgage million our model. for cost deepened benefits the of We and than remain origination Expenses benefits of million target. million details One generated year-over-year, customer existing Mortgage $XX $XXX a highlighting includes XX down highlighting the direct-to-consumer deposit origination on of than a half great rather experience Slide relationships. customers $XX volume

for remains based XXXX. what granular environment interest to and volatility Slide we're XX the know a maintaining currently. approach persists, financial dynamic operating to we providing on in But transparent difficulty contains increasing rate guidance current outlook our The guidance. committed

outlook versus provided You'll in the is page notice largely we the July. unchanged

been considerably. Assuming quarter Fed costs guidance funds a peak out but pushed forward at have versus from curve is X.X%, end, XQ unchanged

full deposits area. for the has X.X% in put could competition above portfolio pressure pick on we likely And Continued fourth year incremental up which X.XX% X.X%, in yield, see NIM quarter. the to

achieving the covered XXXX projected Retail other And and as full Auto $XXX expectation And portfolio to as in X.X% the full we're Retail million guidance. we rate investments. previously, guided quarter, fourth expected for no are Our be for around NCOs operating expansion importantly, January. yield X% from we year, year change guidance the $X.X prior costs billion, to to spend thereafter. to limit quarterly in and we with remains run unchanged expense continued is essential revenue at still nondiscretionary

tax for of We that tax the rate the to X% year closer in some see given items the planning hit XQ.

tax We expect trend solid we've EV and tax in XX% to rate momentum credits approximately as effective our absent expect tax to generating near-term return planning items had that continue. to

have margin the positioned confident remain and drive profitability. most growth in of cycle medium is and to term and and for sheet and execute the over ability behind elevated While long-term headwind, balance the expect increasing to interest continue rates us we tightening are our a earnings

a the it for next David's cars his [ him. ] unpack this you the when Group, perspective, But my also love Hendrick was right for simply a was From bit week news surprise. and realize last and step of

the all J.B. miss how dearly, the and to positions, and at about changes outlook. same for -- in for him, to excited going and scale that the am about excited Ally. feel J.B.'s are opportunity have those it's remember I or the time, We we no talking teammate I that to we're have I The JB Ally's been team established enviable financial moat today. fantastic are businesses and clear position. attractive about an news in my way accomplish

with to turn that, And I'll it J.B. back

Jeffrey Brown

this and will you miss I as certainly Russ. you, Thank entire team well.

essential everything our guide which success. priorities, we long-term strategic do for unwavering and The are

consumer confident our management differentiated ensuring ways for stakeholders. to priorities team these our leading our allocation. customers. focused the digital more both for highlighting environment and dynamic remove management important us stakeholders. finding strong First across and the and is maintain offerings even I'm commercial foremost experiences. And friction culture continue this approach our all risk for alignment we and deliver value between disrupt and We're is We'll on disciplined delivering help businesses in will to this customers by and capital industry

we Sean, with into you, to that, can Q&A. And head back

Sean Leary

Thank you, J.B.

As we follow-up. question head Q&A. Carmen, and to into yourself X begin that Q&A, we participants . ask do limit the please X

Operator

our [Operator of Nash Sean. first moment Goldman comes Ryan for question. from line One with Instructions] It the Sachs. Thanks,

Ryan Nash

lot decision the of view a Obviously, tiny you your that just this still Maybe impact on all? frame still gave the the generating company dig if are the believe EPS time? and company exit over deeper, a time the levels decision $X do is returns not, right to mid-teens of the company. bit And of time to of at color capable for did intermediate an over over you

Jeffrey Brown

No. confident thanks the going company of did in Ryan, decision way, forward. I or any Financial for change feel drive the shape my even form. in financial outlook more not Yes, or question. the profile

I you're roll you be typing that to X%-plus into tried big the Russ we of think, margin start But sheet of a and factor roll I face. rates, that driving in to forward, obviously, as [indiscernible] points, as new been really alluded both the to, balance start have or and hit slides I the in you going kind to forward, those and think include X balance mid-teens. sheet easily X we I mean, the this as time some to

outlook. So this the about in change financial in the strategic outlook, was all any not driven confidence at

throws life call leading it's at to obviously, that say, one would listen I scenario. that's to years, this the that call one and this had Ally think X for intentions I'd that happened if this was me an has past call no go, probably but I you what my honor years. ever to. this heard talked as be and been real And really X - for Board about had I sometimes take curve came, in balls, least the you

know to company But day dealer mean Group, years, admire. for me love what's Hendrick Mr. have franchise so this And of out. I the was a this they're with that of go opportunity touch for a a I the partners. Hendrick and all of a partners, we respectful our unbelievable but family, thousands to a many people in really day is number out dream I'm and man, got Obviously, that and really premier I Automotive deeply and of dealers there. work

well. it's north big in annual the sell They Big industry XXX,XXX player, as I billion of big in defense a $XX business, work revenues. parts mean cars.

So that's decision. fit to nothing it damn it I this the to I hard that the of attractive so frankly, teammates on me a have weighed outlook. made the of but Ally, financial and many next certainly, just this profile in personal make lot for reasons -- as outlook, is going great me that is strategic It CEO forward. comes financial think a going pretty to decision, And leave

being And so to degree in No fun be going but this. response, Ally view sorry my it's for my change confidence. or drove now, Ryan, that's an big the what awfully really too. long-winded of And customer

Ryan Nash

Got it. all J.B. I appreciate No, color the on that,

of and trough decline I quarters will you X.XX So in on around as couple maybe points interest a of I said the quarter. full basis the think which think rates in after a I know couple the NIM And you well, noted can that implies dig for year, you Russ, helpful stabilize. net fourth margin.

the higher to which curve, forward the dynamics? you cuts under either -- can near-term the for a of So you just little bit the flesh maybe then Do implying be just for next year? NIM of the out trough? longer X is can maybe trajectory And in the you think margin obviously to or unpack some XQ maybe X numbers seems just of

Russell Hutchinson

think Ryan. terms think XXXX. of within on quarters. in of spot about of rates with you're Thanks, you're troughing And I commentary spot couple a Look, in I thinking the terms Sure. on

the I the is And are do cycle. we that key we are view of rates where think go tightening there think here? under the towards from question end I the

And start so to through extent there, we're the first expand next the see I half rates of that year. think we could to already

that could expansion you not delayed. be that the next see we're expand could NIM To in start half but year. close to of So quite the first there, extent

to portfolio it's question timing view, being of replacement that we I question of in earlier, a our effect if. that opposed strong is pointed as the All out, pages dynamics in it pointed out out I real. some terms is said, and in rate pointed as And and as earlier, our a J.B. the of expansion of think, that of

a environment, expedited. expansion. here XX end, say, would quarter short NIM higher I could see of stable basis cuts per context, points And you to a see to the we on extent that see of longer And we'd and obviously, said, as we to expansion about X that we the that we in rate so terms in think for scenario. things like expect And

Operator

line Sakhrani our from please. comes the One moment And for Sanjay KBW. with question, next it of

Sanjay Sakhrani

J.B., congrats.

Jeffrey Brown

Thank you.

Sanjay Sakhrani

talk you been of leaning search guys terms with in ride. It's where we the might Maybe what be. are can the Is external? CEO it that? Yes. Any internal, and criteria a quite about

Jeffrey Brown

still the stages. Yes, Board, say talked I'd obviously the I early to was had Chair of bit I my of considering Sanjay, a that thanks. this.

look search those time structuring a thoughts of their So sort committee Board had profile start and a own things. what all the like, our to about would bit of candidate

So had really we last that when meeting this was our that at timing week, my that point is and I underway. Obviously, lead submitted firm to now, Board time. meeting, was of notice officially in the and at that the related,

we Wednesday last And this. public with so went obviously,

able to next in I'll of carry the But excited with important finding X, to a for doing to process. XX Board, Ally is the XX, say type that to very I'd that's involved the job. really me, I'm in great right say be our Board in years. partnership And leader, be

the an So things easier search. firm. conduct external are that out in can that We're it's with leading search public working global domain, obviously a you

is can that of transform trying And our very and also get underway. really And to on can forward businesses. to somebody the continue think carry Board I the the focused culture so company that's

very as in transformation one their what's of I confident person. years. chapter. team an ability and it's every this been in been fully am accomplished said over always I'm of has to X employees incredible about I've and has This -- never proud next by But been our and all this led one our Board, leaders executing my to continue

we strong So credit be really base. never transformation our that's come recognizing all I think the employee -- the hungry will for Ally management next and crack. executed. a to they leader go have believe has an opportunity And for in I think got been new neat to fully us team, have leader a they of that's And a going exceptionally

But And going if of new But so bring it's close the underway, I've customer very ensure of leader, leader, Sanjay. be I've obviously, take great all leader. mark it's the to somebody things. the be obviously and level. next in to get we suspect to right get said of to timing January a that that tried a we'll Ally, in I transformational I through a going a interest going a that's leader, needed. my here, those carrier, I is to would think we culture I'm be a around even when be servant end here to

So underway, by hope end you'll be the and it's to next our of January I talking would CEO.

Sanjay Sakhrani

maybe years, back, take But then Okay. should Russ, we my if we X maybe through the follow-up goes practically could just how of of Perfect. step Slide over implications you regulation. And a sort question, next all appreciate it could X proposed you the the should talk balance lines and impact? that what capital think maybe just think over Maybe debt how obviously, I it specific about Like sheet? years. the couple the next does the return. issuance, of we there's mean P&L flows about through that

Russell Hutchinson

by a they're in other I'll that our can proposals industry it AOCI. are obviously terms the working that the impact far unnatural, feedback start with one to We has it for make And make can constituents stated. proposed And can so endgame. J.B. sure industry currently Sanjay. And said, as manage biggest period you've transition organically. as The clear. we complicated It's been fact Thanks, is being great It's the proposals. the . All just earlier, reflected. Basel that to manage I'll doing reaction and of within Sure. mentioned that these and question. we manage maybe Yes. we're time a III as with that's had without anything us has is is heard,

of that from of repurchases. partners, restrained forced the our frankly, our you really also we origination growth Auto certainly decisions you our assets quite of As trajectory dealer just to it's seeing if our imagine, And attractiveness of And have make had curtailed businesses. hard around at our volume. the it's in growth to be can business, terms share us obviously some looking we're the at look

unsecured And the as inclusion. AOCI requirement very debt, you impact All company is for real unsecured can it's the laid you that level. Because IDI within that binding debt bank at and the line manage capital is significant imagine, and our said, the We actually have X% slide, his as long-term us level. frame time on of bank only on being we can for issued holding out the our don't provided. is the at early, been us level debt at at look that's JB the When today.

have drive going at look issuance and -- expense. liquidity could currently to interest would stated, today, issuance, from the sit the obviously incremental as at look proposal level where our to is going And obviously which to through we would and the require require to so with bank we that's that additional it's which come really us the us holdco versus --

Sanjay Sakhrani

like too, then, could in the it you of I invest be it And liquidity wouldn't so terms Okay. impact, that just full right? and mean, take

Russell Hutchinson

Yes. any don't when to some in clearly benefits takes, see our RWA. Absolutely end from and That correct. are an retail we about And but our clear, loan think you perspective, III by game we offset increase change portfolio. there in the Basel just the to is be RWAs operational RWA puts of significant see

Operator

your Markets. of with our Arfstrom from Capital for line verify button. RBC please question, Jon next moment please. It's One mute coming Jon, the

Jon Arfstrom

Can right? you hear all me

Operator

ahead. Go sir. Yes,

Jeffrey Brown

Got you Jon. now,

Jon Arfstrom

Question that. XX. Slide Appreciate on you for

going it on one Just curious but picture on simple, the are the what up. sounds -- on what big message credit performance charge-offs is auto hand,

are fourth delinquency feels the we as other simple? XXXX delinquencies to credit send? too with hand, you're the getting going it What's trying the And past the quarter better? numbers, the down. look into On Is be like should actually that that message

Russell Hutchinson

the track as Yes. see That X.X% it. last trends. that try I on of quarter. mean, and there's clear as We we delinquency towards NCO being very maybe ourselves in much rate to be I'll terms possible said, advertised seasonality start about our just

so go we as trajectory second fourth through Page what third on bottom from XX, that left seasonality to expressed in see And quarter to see the as you the NCO you quarter. quarter

level we fourth activity. typically our highest is NCO see of So when quarter

fourth so show And X.X% X.X% the to X.X% NCO quarter X.X%. we the X.X% rate. a for consistent full with year That is

So expression that's an the portfolio. in our seasonality of

issue. we're what doing that year-over-year through is right, we're bottom get change the of seasonality On some showing to

seeing you that versus those versus comparisons 'XX XQ XQ 'XX. look XQ quarters of 'XX 'XX -- as the you're So XQ at each is

you last look can levels you on you coming been those year-on-year -- that sequentially basis, currently And see it it X for strain. quarter that the down, delinquency can we're down the elevated seeing, elevated that a coming and see each so actually year-over-year when at that change quarter has is they're

that seeing performance our and impact to curtailment we a vintages, and recently. but of the that's terms pricing, very think One, implemented, early a through curtailments we're recent seeing real to to And of portfolio lot couple pricing in our reflection we're And our those of things. tell, of of vintages. changes we we a are actions. early It's in

On of expectations in when at are that, side vintages we XXXX our you vintages, look improvement those our seeing as with respect other to the original well.

rate. to continue keep that but us early to so days, see we on NCO signs And positive track X.X% again, that

Jon Arfstrom

helpful, X.XX had follow-up XX. on Okay. you deposit rate then Slide just Russ. I average. And The That's appreciate for that quarterly that. one the

You if about Or else costs? deposit just deposits. as is Fed talked happening is it savings competition that rate? on X.XX intense on there X.XX But to marches your something simple is the done, pricing as

Russell Hutchinson

it's No, question. great also a

So we look, the deposit -- see over always so And latest you'll raise to competition see because quarter. impact full fourth our expectation the our after course early during we and of continue of raise. the it's the that of and expected in this, competition, even last OSA you the quarter, we've raised

say at X.X% we've guidance. And We fourth for we've we changed we our presentation, to yield our We've it's you outlook, moved X.X% -- probably talked overall now, so now about to were and in quarter. deposit that the up are where noticed X.X%.

So forward. we're deposits of increased on possibility ruling pricing the going out and pressure possibility continued of the not

Operator

our All right. please. next One for moment question,

from Our Bill the line next comes Wolfe of Research with Carcache Securities. question

Bill Carcache

luck, best. you J.B., the good . wish And

Jeffrey Brown

very you much, appreciate Bill. I Thank that.

Bill Carcache

all guess asset your funds on OSA I ] funds guess, that, to Ally on to upward that outlook the rates that continues given Fed betas guidance. offsets I persist would wanted above long to for SERP further yields, and been absolutely. your And just potential your continue be for there's OSA rates [ And and the with Yes, pressure follow Fed Fed the environment, upward converge offered already you've have as from ultimately concern possibility the there's the funds. that could color on may as that rate. rates particular, I deposit you're rates the thoughts offering. to commentary exceed around on beta up great. a and around NIM the in Historically, debate face in pressure a

Russell Hutchinson

think Great. at the the cycle. of we're end tightening we Look,

in deposit there's say But have Assuming favorable. our been true, that from think a trends slightly the tick book quite possibility. we're that a seeing do I rates say I'd our do here. actually that's we OSA possibility it's up

to attracting We're as platform. in attracting in out a fact, new during of in As the about new pointed quarter great year, really customers. had and to J.B. terms our have I mentioned of presentation, we've terms a customers record

We continue of at But seeing seeing we it in savings like of of right strong deposit have momentum you rates. terms of again, retention. our customer things are customers advantage highest in to We're our growth. in incredible our it seeing We're not look taking base. toolkit. terms terms liquid with it new now when we're the And customer payer

uptick. pricing, certain up we would possibility, marginal do point, tick It again, And possibility we just so would And marginal, a that. while, think I not characterize think that a be could this yes, as it that a at there's outcome. we OSA on it's a

Bill Carcache

to some on could the just changes your Since on could game. I And IV Basel up been regulatory capital, your to end could that just capital continue Maybe should you introduces they of CETX? of debate this than any That's bigger follow and changes range sort into impact Understood. the there's long-term a if helpful. to run of with lead expect if whether AOCI capital speak we have commentary for buffer to volatility to the around X% banks inclusion Or historically. have targets.

Russell Hutchinson

full certain plating look think And number when I regulatory target a points there takes kind around would of look, management percentage puts that's asset say, requirement. classes. north X% Look, I our our now, obviously of There's lot the I X a of of Yes. into a proposals. are at and gold

any we're at our now, to significant going billion approximately I of feel I X.X% changes sitting minimum. forward. anticipate capital capital don't about regulatory manage to right how pretty excess So and where $X.X relative we the is, good at capital

Operator

question Sandler. last with from Kevin Piper line Our comes Barker the of

Kevin Barker

best luck Hendricks. of J.B., with you. a at It's pleasure working

Jeffrey Brown

you. Likewise. Thank

Kevin Barker

on X% just I to wanted NIM Yes, it up the over for XXXX. in follow at particular, seems like the NIM point, conversation. In a some projection

do environment it sometime the could rate current view, your debt that rules in Or you see a in do III or achieve and rate rate you X% just early potentially 'XX? like Basel or run today? in late late current additional it environment Now sometime issuance given changes, as you the expect feel 'XX around you achieve with to the different given

Russell Hutchinson

than environment still But speculate say environment, your NIM. to the I'd crystal rates. stable rather say address question I'll around our Yes, clear get expectation and of in to stable rate is I'd in a a rate X% timing --

the kind at think impact. of I we're portfolio replacement looking

see XXXX. you entering think I there us could

Kevin Barker

that... does then And

Russell Hutchinson

the to in business speculating and go. in that view Caveat be that short-term where the rates want with I of don't terms

Kevin Barker

lending? sector estimated be just it. We've is banks Got year, from least that back on next the reengaging. for auto Do origination like yields. seemed XX.X% competitive Do few stable that competitive given through you yields feel auto in last just at but to you Makes or seen like quite the number pull your origination a a future the an follow-up you environment? adequate environment XX.X% can foreseeable the maintain feel a And then sense.

Russell Hutchinson

competition actually past I durability seen we've around think time in in than pullback The actually. what cycles. do, I to has it Yes, more this

it that really folks, they're has on of are to make number think on, core them. hard business people and for businesses isn't folks the other a focus For this And a forced to regulatory pressures the that I decisions best at. really capital

had We've various Finance Auto for absolutely you at capital business across think know, the to businesses through But us. certainly core our as is allocation Ally.

competition I dialed we're haven't to they currently their so this environment originations. think competitive the the at And And seeing. that that in I just pullback back players you Many when look exited a altogether. creates have think durability market

yes, can think I rates. maintain So our we do

just kind you at increased when that of remember, same And -- the tightening just you we've time when our would been pricing I unpack we've say, yields, credit.

time listed we've originations credit we've the -- pricing. same at of profile the so credit that our the increased And

beta printed. XX% than significantly in we've If the terms you basis, were our show we actually this XX.X% on and that a credit same to look at yield, it pricing has increased more what of

want So seeing in there to have create I us down And ability down, obviously, we're that a of competitive yield we effect to that place. currently yes, that's the speculate I replacement do headwind. will rates in durable maintain is so number us that for environment think rates of the now think that a and levers I give a don't while. but tailwind coming causing coming XX.X% a portfolio just on for terms

Sean Leary

time you we have Thank today. That's all. for all the

reach feel us today's concludes to Investor you to call. Thank As always, joining additional this if out That Relations. for questions, you free have please morning.

Operator

your for you Thank participation.

You may now disconnect.

Ally Financial (ALLY) 18 Oct 232023 Q3 Earnings call transcript