NYSE:ALLY Ally Financial Q2 2025 Earnings Report $38.52 -0.30 (-0.76%) Closing price 03:59 PM EasternExtended Trading$38.54 +0.02 (+0.05%) As of 06:16 PM Eastern Extended trading is trading that happens on electronic markets outside of regular trading hours. This is a fair market value extended hours price provided by Polygon.io. Learn more. ProfileEarnings HistoryForecast Ally Financial EPS ResultsActual EPS$0.99Consensus EPS $0.78Beat/MissBeat by +$0.21One Year Ago EPS$0.97Ally Financial Revenue ResultsActual Revenue$2.08 billionExpected Revenue$2.03 billionBeat/MissBeat by +$50.55 millionYoY Revenue Growth+3.00%Ally Financial Announcement DetailsQuarterQ2 2025Date7/18/2025TimeBefore Market OpensConference Call DateFriday, July 18, 2025Conference Call Time9:00AM ETUpcoming EarningsAlly Financial's Q3 2025 earnings is scheduled for Friday, October 17, 2025, with a conference call scheduled at 9:00 AM ET. Check back for transcripts, audio, and key financial metrics as they become available.Conference Call ResourcesConference Call AudioConference Call TranscriptSlide DeckPress Release (8-K)Earnings HistoryCompany ProfileSlide DeckFull Screen Slide DeckPowered by Ally Financial Q2 2025 Earnings Call TranscriptProvided by QuartrJuly 18, 2025 ShareLink copied to clipboard.Key Takeaways Positive Sentiment: Ally reported Q2 adjusted EPS of $0.99, core pretax income of $418 M, and a net interest margin of 3.45%, all up double digits year-over-year. Positive Sentiment: The bank is remixing its balance sheet by running off low-yield mortgages and credit cards to add higher-yield auto and corporate finance assets funded by low-cost deposits. Positive Sentiment: In auto finance, originations hit a record $11 B with yields near 9.82% and 42% in the top credit tier, while net charge-off rates improved to 1.75%. Positive Sentiment: Credit metrics are strengthening, with 30+ day delinquencies easing to 4.88% and Ally narrowing its full-year net charge-off guidance to 1.35%–1.45%. Neutral Sentiment: Deposit balances declined $3 B sequentially from seasonal tax outflows but are expected to be flat for the year, with 92% FDIC-insured and a 70% deposit beta on rate cuts. AI Generated. May Contain Errors.Conference Call Audio Live Call not available Earnings Conference CallAlly Financial Q2 202500:00 / 00:00Speed:1x1.25x1.5x2xTranscript SectionsPresentationParticipantsPresentationSkip to Participants Operator00:00:00Good day and thank you for standing by. Welcome to the Q2 twenty twenty five Ally Financial Earnings Conference Call. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question and answer session. To ask a question during session, you will need to press 11 on your telephone. Operator00:00:21You will then hear an automated message advising your hand is raised. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Sean Leary, Head of Investor Relations. Please go ahead. Sean LearyChief Financial Planning & Investor Relations Officer at Ally Financial00:00:41Thank you, Daniel. Good morning and welcome to Ally Financial's second quarter twenty twenty five earnings call. This morning, our CEO, Michael Rhodes and our CFO, Russ Hutchinson will review Ally's results before taking questions. The presentation we'll reference can be found in the Investor Relations section of our website, ally.com. Forward looking statements and risk factor language governing today's call are on Page two. Sean LearyChief Financial Planning & Investor Relations Officer at Ally Financial00:01:06GAAP and non GAAP measures pertaining to our operating performance and capital results are on Slide three. As a reminder, GAAP or core metrics are supplemental to and not a substitute for U. S. GAAP measures. Definitions and reconciliations can be found in the appendix. Sean LearyChief Financial Planning & Investor Relations Officer at Ally Financial00:01:23And with that, I'll turn the call over to Michael. Michael RhodesCEO & Director at Ally Financial00:01:25Thank you, Sean. Good morning, everyone, and thank you for joining us for our second quarter earnings call. Let's begin on page four. I'll start by saying that I'm encouraged and energized by the progress we've made as an organization over the first half of the year. Our sound strategic positioning and disciplined execution are contributing to an improved financial trajectory, which is clearly reflected in our second quarter results. Michael RhodesCEO & Director at Ally Financial00:01:53In the second quarter, Ally delivered adjusted earnings per share of $0.99 and core pretax income of $418,000,000 We achieved double digit year over year growth in both metrics, underscoring the benefits of a more focused, streamlined and purpose driven institution. Net interest margin, excluding core OID was 3.45, expanding 10 basis points quarter over quarter, that's more than offsetting the 20 basis point drag related to the sale of the credit card business. We continue to run off low yielding mortgages and securities and add higher yielding retail auto and corporate finance assets, funded by high quality, stable and low cost deposits. This structural remixing of the balance sheet sets the foundation for continued margin expansion going forward. Our first half trajectory reinforces my conviction in our ability to deliver compelling and sustainable returns over time. Michael RhodesCEO & Director at Ally Financial00:03:01We delivered a core ROTCE of 13.6 in the quarter. But as you know, AOCI reduces the ROE denominator. Excluding that benefit, we generated core ROTCE of 10%. I'm pleased with the progress we've made and I'm even more encouraged by the momentum we're building. We recognize there's significant opportunity ahead, and we are well positioned to capitalize on it. Michael RhodesCEO & Director at Ally Financial00:03:30As I reflect on the quarter, there are three key takeaways that I will expand on. First, our sharp strategic focus is transforming Ally into a stronger, more profitable institution. Second, the Ally brand continues to resonate deeply with our customers, building loyalty and trust. And third, our customer centric culture remains one of our greatest differentiators. Our strategy remains clear and is being executed with discipline by our over 10,000 colleagues across the organization. Michael RhodesCEO & Director at Ally Financial00:04:07Our three core franchises are meaningfully differentiated with tremendous runway and scale. The new business we're putting on the balance sheet today is expected to generate a mid teens return over its life. In Dealer Financial Services, we're booking new fixed rate retail auto loans at nearly 10% funded by core deposits below 4% with expected annual losses between 1.61.8%. DFS also continues to benefit from strong fee revenue driven by our pass through and smart auction adjacencies. Our Insurance business continues to benefit from natural auto related synergies, leading to robust written premium growth and investment revenue. Michael RhodesCEO & Director at Ally Financial00:04:54In Corporate Finance, our portfolio has attractive floating rate yields and we continue to see healthy fee income from syndications. This business continues to deliver strong returns across different credit cycles, anchored by seasoned leadership and disciplined underwriting. Altogether, these businesses backed by strong deposits franchise are positioned to deliver mid teens returns. And now to our brand. Whether through strategic partnerships, impactful marketing, or deep community partnerships, the Ally name stands as a brand that is synonymous with trust and purpose. Michael RhodesCEO & Director at Ally Financial00:05:35Our Net Promoter Score remains well above industry averages, reflecting the strength of the relationships we built. Our customers are our greatest brand advocates. Roughly 15% of new deposit clients are sourced from our refer a friend program. A strong trusted brand is a powerful growth multiplier, And we are seeing that every day through efficient customer acquisition, strong retention, and deeper engagement. And finally, few reflections on our culture. Michael RhodesCEO & Director at Ally Financial00:06:09Do it right is more than a slogan. It's a shared ethos that shapes how we serve our customers, support our teammates, and show up in the communities we serve. We invest deliberately in nurturing our culture, and our results are clear. In fact, just last week, our latest employee engagement survey ranked us in the top 10 of all companies for the sixth consecutive year, eight points above the financial services industry benchmark. Beyond attracting and retaining top talent, this level of engagement fuels performance. Michael RhodesCEO & Director at Ally Financial00:06:45It accelerates change and enhances the customer experience, which is reflected in our customer service satisfaction rating, which is holding strong around 90%. With that context in place, let's turn to page five to dive into operational results and performance trends this quarter. Within our auto finance business, consumer originations of $11,000,000,000 were driven by 3,900,000 applications, marking our highest quarterly application volume ever for the second consecutive quarter. This sustained momentum of application flows speaks to the strength of our dealer relationships and the scale of our franchise and reinforces our position as the top bank auto lender in the country. Our scale enables us to be highly selective of the loans we book, optimizing both pricing and credit decisioning. Michael RhodesCEO & Director at Ally Financial00:07:43Origination yields of 9.82% were up slightly versus the prior quarter and down 77 basis points from the prior year. Notably, this decrease was more modest than the decline in benchmark rates, highlighting the relative strength in our pricing position. 42% of our originations come from the highest credit quality tier, which will continue to support strong risk adjusted returns moving forward. This quarter marked the ninth consecutive with over 40% S tier mix in new origination volume. As we've outlined in previous calls, we expect our origination mix to normalize gradually over time. Michael RhodesCEO & Director at Ally Financial00:08:28Our ability to dynamically adjust both price and risk appetite gives us the flexibility to evolve alongside market conditions. Let's turn to insurance, where our average dealer inventory exposure rose by 23% year over year, driven by new relationship wins and tight integration with our auto finance business. We have 3,900,000 active policies outstanding, an increase of over 1,000,000 since our IPO. Our insurance team supports 7,000 dealers across The United States and Canada and with access to a broader network, we see meaningful opportunity to grow our footprint. I'm pleased with the strong performance and the alignment between our auto and insurance businesses, which enhances the value proposition we offer our dealer customers. Michael RhodesCEO & Director at Ally Financial00:09:20In Corporate Finance, we delivered another strong quarter, generating a 31% ROE. Our long standing relationships with financial sponsors have supported solid growth with attractive returns, all while maintaining disciplined risk management. We continue to see opportunities for prudent organic growth within our current verticals and are actively exploring new products and solutions to generate incremental accretive business. Turning to our digital bank, we remain focused on delivering best in class digital experiences that empower customers to save, invest, and spend with confidence. With no hidden fees, an award winning mobile app, nationwide ATM rebates and 20 fourseven access to live customer care, our customer first approach sets us apart. Michael RhodesCEO & Director at Ally Financial00:10:16This commitment earned us multiple accolades again this quarter for customer satisfaction. Our robust suite of digital tools is driving deeper engagement, fueling customer loyalty, and reducing rate sensitivity. We proudly serve an all time high of 3,400,000 customers, marking sixty five consecutive quarters of net customer growth. We ended the quarter with balances of 143,000,000,000 reinforcing our position as the nation's largest all digital bank. Overall, deposit balances were down approximately $3,000,000,000 quarter over quarter. Michael RhodesCEO & Director at Ally Financial00:10:59Now this is aligned with our April guidance largely due to seasonal tax outflows. For the year, we continue to expect relatively flat balances, which is sufficient to support the asset side of our balance sheet. At the June, we lowered liquid savings pricing an additional 10 basis points, representing a cumulative 70% beta since the start of Fed easing cycle in the second half of twenty twenty four. Deposits are the foundation of our funding profile, representing nearly 90% of total funding and 92% are FDIC insured, demonstrating both strength and stability of our deposit base. Now before I turn it over to Russ, I'd like to leave you with this. Michael RhodesCEO & Director at Ally Financial00:11:47If there's one thing to take away from today's call, it's that Ally's focused strategy is working and you're starting to see it in our results. We have three market leading franchises with tremendous runway backed by an industry leading brand and a culture that sets us apart. And with that, I'll turn it over to Russ. Russell HutchinsonCFO at Ally Financial00:12:07Thank you, Michael, and good morning, everyone. Let's turn to Page six and walk through second quarter performance. Our financial results for the quarter reflect the closing of the sale of our credit card business on April 1. Accordingly, comparisons to both prior quarter and prior year impacted. Excluding core OID, net financing revenue totaled approximately $1,500,000,000 consistent with both the prior year and the prior quarter. Russell HutchinsonCFO at Ally Financial00:12:36We're seeing strong momentum in our core franchises led by continued yield expansion in our retail auto portfolio, strategic remixing of the balance sheet towards higher yielding asset classes and the ongoing optimization of deposit pricing. On a quarter over quarter basis, this momentum more than offset the lost revenue from the sale of credit card. Turning to adjusted other revenue, which totaled $531,000,000 results were approximately flat year over year as the removal of fee income from credit card and the wind down of our direct to consumer mortgage origination platform was offset by growth from insurance, smart auction and our pass through programs. Adjusted provision expense of $384,000,000 was down 23% to the prior quarter and down 16% year over year, primarily driven by the sale of credit cards. In retail auto, the NCO rate declined six basis points year over year to 1.75%. Russell HutchinsonCFO at Ally Financial00:13:39We are encouraged by the trends within the portfolio as vintage dynamics and servicing strategy enhancements continue to drive an improvement in losses. However, we remain mindful of macroeconomic uncertainty. I'll speak more about credit performance in a moment. Adjusted non interest expense was $1,300,000,000 down 4% sequentially and 2% to the prior year. Notably controllable expenses, which exclude insurance losses, commissions and FDIC fees were down for the seventh consecutive quarter underscoring our commitment to cost discipline. Russell HutchinsonCFO at Ally Financial00:14:16We do not expect a year over year decline in controllable expenses next quarter driven by non recurring benefits recorded in 2024. However, we remain committed to prudent expense management going forward. In the quarter, we recognized tax expense of $84,000,000 resulting in an effective tax rate for the quarter of 19%. This rate was favorably impacted by a recent state law change that drove a revaluation of certain tax credits. Looking ahead, we continue to expect a normalized effective tax rate in the range of 22% to 23%. Russell HutchinsonCFO at Ally Financial00:14:52However, discrete items may cause the effective rate to differ in any given quarter. On a GAAP basis, we generated earnings per share of $1.04 for the quarter. Adjusted earnings per share for the quarter was excluding OID was 3.45%, an increase of 10 basis points from the prior quarter. Margin expanded 30 basis points excluding the impact from the credit card sale, which was an approximate 20 basis point headwind in the quarter. On a quarter over quarter basis, NIM expansion was driven by the following: organic yield expansion in the retail auto loan portfolio normalization in retail auto lease yields following a loss on lease terminations in 1Q the benefit of securities repositioning transactions executed in March, deposit repricing across liquid savings and CDs and continued portfolio remixing to higher yielding retail auto and corporate finance assets. Russell HutchinsonCFO at Ally Financial00:15:54Some of these factors that are now embedded in our run rate NIM will not contribute to additional NIM expansion going forward. The normalization of lease gains and execution of securities repositioning transactions added eight basis points to the linked quarter margin expansion in 2Q, but are not expected to contribute to additional NIM expansion from here. Also, saw benefits from elevated securities runoff as well as higher auto prepayments, particularly in lower yielding loans likely tied to the pull forward of new vehicle sales. We expect to see continued margin expansion from liquid savings and CD repricing going forward, albeit at a slower pace than we saw in 2Q. In retail auto, excluding the hedge, portfolio yield expanded eight basis points quarter over quarter to 9.19%. Russell HutchinsonCFO at Ally Financial00:16:46As the lower yielding back book rolls down, we expect the portfolio yield to migrate towards originated yield over time. Turning to our retail auto lease portfolio, overall yield increased 119 basis points sequentially as lease remarketing gains normalized in line with our expectations. On the liability side, 2Q results reflected the full impact of reductions in liquid savings rates in the first quarter. In late June, we lowered liquid rates by 10 basis points to 3.5%, notably ahead of any upcoming Fed action, bringing cumulative liquid beta to 70%. Also in the quarter, we continue to benefit from a natural tailwind in CD repricing with $11,000,000,000 in maturities this quarter with strong retention and renewal rates. Russell HutchinsonCFO at Ally Financial00:17:35We're pleased with the momentum of the franchise, stability of the portfolio and the pricing power today. As we've covered previously, Ally is liability sensitive over the medium term, but asset sensitive in the very near term, driven by floating rate commercial loan and pay fixed hedge exposure. As a result, reductions in Fed funds, particularly material reductions like we saw in late twenty twenty four are a headwind to margin expansion in the near term. I'll cover the outlook in more detail later, but we remain confident in our ability to deliver a full year NIM of 3.4 to 3.5%. More importantly, we maintain conviction in our ability to achieve a sustainable margin in the upper 3s over the medium term. Russell HutchinsonCFO at Ally Financial00:18:21Turning to Page eight, our CET1 ratio of 9.9% represents more than $4,000,000,000 of excess capital above our SCB minimum. On a fully phased in basis for AOCI, CET1 for the period would have been 7.6%, an increase of 80 basis points from the prior year. Both measures include the 20 basis points of capital generated from the closing of the credit card transaction on April 1, a transaction that contributed 40 basis points of capital in total and enabled us to reposition a portion of the securities portfolio last quarter. While we did not execute a credit risk transfer transaction in the quarter, we continue to view CRT as an efficient way to generate excess capital that we will likely leverage in the second half of the year. Our capital management priorities remain unchanged. Russell HutchinsonCFO at Ally Financial00:19:13We are deploying capital to drive accretive growth in our core franchises, while continuing to move our stated and fully phased in CET1 levels higher. In terms of capital distributions, earlier this week, we announced a quarterly dividend of $0.30 per share for the third quarter of twenty twenty five, consistent with the prior quarter. Buying back shares, particularly at the current valuation remains a key capital management priority. The combination of higher CET1 levels, improved returns and consistent organic capital generation are key factors that will determine the appropriate time to repurchase shares. Turning to book value at the bottom of the page, adjusted tangible book value per share of $37 increased 12% from the prior year. Russell HutchinsonCFO at Ally Financial00:20:00Excluding the impacts of AOCI, adjusted tangible book value per share of $48 is up over 125% from 2014. We remain focused on growing tangible book value per share and driving shareholder value through disciplined capital management in the years ahead. Turning to Page nine, credit quality trends across all our lending portfolios remain encouraging. The consolidated net charge off rate was 110 basis points, a decline of 40 basis points to the prior quarter and a decrease of 16 basis points to the prior year. This quarter's consolidated net charge off rate reflects the impact of the card sale, which contributed to the year over year improvement. Russell HutchinsonCFO at Ally Financial00:20:43In retail auto, the net charge off rate was 175 basis points, down 37 basis points sequentially and six basis points year over year. This marks the second consecutive quarter of year over year improvement, reflecting strong performance from recent vintages and continued enhancements to our digital servicing capabilities. That said, we remain mindful of the elevated level of uncertainty that we are currently navigating. Moving to the top right of the page, thirty plus day all in delinquencies of 4.88% represents the first year over year improvement in delinquency rates since 2021, a positive inflection point for credit performance. Since delinquency trends are a leading indicator of charge offs, this improvement reinforces our constructive view on the near term loss trajectory. Russell HutchinsonCFO at Ally Financial00:21:33Vintage level delinquency performance trends are included in the supplemental section of the earnings presentation and are also disclosed in our 10 Q and 10 ks. We continue to observe stable and consistent delinquency performance trends across the 2022 and 2024 vintages and added the 2025 vintage to the disclosure. As we noted last quarter, the benefit of vintage rollover is clearly playing out in actuals. Looking holistically at credit measures, we remain encouraged by the performance of the portfolio and the effectiveness of our servicing strategies, but remain cautious of macroeconomic uncertainty going forward. Turning to the bottom of the page on reserves. Russell HutchinsonCFO at Ally Financial00:22:15Consolidated coverage increased one basis point this quarter, while the retail auto coverage rate remained flat at 3.75%. As we guided last quarter, the increase in the consolidated coverage rate was due to mix dynamics. Our retail auto coverage levels continue to balance the favorable credit trends we're seeing, namely improved delinquency rates and recent turnover in the portfolio to higher quality vintages against an uncertain macroeconomic outlook and the expectation of worsening unemployment. As we've consistently said, we do not forecast reserve releases and they are not incorporated into our mid teens return guidance. Moving to our auto finance segment on Page 10. Russell HutchinsonCFO at Ally Financial00:22:57Pretax income of $472,000,000 was $112,000,000 lower year over year, primarily driven by lower lease gains and a decline in commercial auto balances. Our lease remarketing performance improved quarter over quarter to approximately breakeven versus a loss in 1Q. Going forward, we expect remarketing performance to be less of a factor given the reduced volume of terminating units not covered by residual value guarantees. Commercial floor plan balances reflect industry trends and inventory levels, partly influenced by tariffs that likely pulled forward consumer demand. That said, while dealer inventory levels remain lower, increased sales activity and the financing of leaner inventories have continued to support overall dealer health and profitability. Russell HutchinsonCFO at Ally Financial00:23:46As illustrated on the bottom left, retail auto portfolio yields excluding the impact from hedges increased eight basis points quarter over quarter. As we noted, the portfolio yield will continue to migrate towards originated yields through time. Originated yield of 9.82% was up two basis points quarter over quarter with 42% of all retail volume coming from our highest credit tier. Turning to our insurance business on Page 11. We recorded a core pre tax loss of $2,000,000 as higher losses more than offset strong growth in premiums and investment revenue. Russell HutchinsonCFO at Ally Financial00:24:21Total written premiums of $349,000,000 were up $5,000,000 year over year and down $36,000,000 on a sequential basis. As a reminder, our annual excess of loss policy renews each April. This year's renewal came at a higher cost as we increased coverage levels in response to growth in the business. The associated premium paid for this policy is recognized as a reduction in written premium, which impacted results for the current period. Excluding the impact of excess of loss, written premiums increased 6% year over year. Russell HutchinsonCFO at Ally Financial00:24:56We continue to see great momentum across the business. The year over year increase in losses was primarily driven by an increase in exposure. Inventory exposure increased by $9,000,000,000 or 23% to the prior year. But importantly, our weather loss ratio remains in line with the five year historical second quarter average. Our reinsurance program continues to materially reduce weather exposure within the book. Russell HutchinsonCFO at Ally Financial00:25:22Looking ahead, our focus remains on leveraging relationships in auto finance and growing earned premiums over time. This remains a key driver of our long term capital efficient other revenue expansion. Corporate finance results are on Page 12. Core pre tax income of $96,000,000 reflected another strong quarter and translated to a 31% return on equity. Net financing revenue of $108,000,000 was up $4,000,000 quarter over quarter and down 4,000,000 year on year with the annual decline driven by lower amortized fee income. Russell HutchinsonCFO at Ally Financial00:25:59End of period HFI loans ended at $11,000,000,000 an increase of $1,300,000,000 year over year reflecting our focus on prudently growing the business. We had no new non performing loans and recorded no new specific reserves, a leading indicator of stable credit. Criticized assets and non accrual loan exposures were 101% of the total portfolio near historically low levels. The team has leveraged its longstanding relationships with financial sponsors along with the strategic expansion of our product suite to drive accretive, responsible loan growth even in a competitive market. Turning to Page 13, I'll close with a brief update on our financial outlook. Russell HutchinsonCFO at Ally Financial00:26:42We're pleased with the execution of our core franchises. Our financial performance through the first half of the year has been in line to better than we expected in January. On net interest margin, we have maintained our prior guidance range of 3.4% to 3.5%. We see a path to the upper half of that range based on current trends. Of course, the timing and magnitude of rate cuts will influence the exit rate given our near term asset sensitivity, but we remain confident that full year results will align with our guidance across a variety of interest rate scenarios. Russell HutchinsonCFO at Ally Financial00:27:18Turning to credit. We are narrowing the range of our retail auto net charge off guidance by 10 basis points to a range of 2% to 2.15%, which results in a full year consolidated net charge off outlook of 1.35% to 1.45%. We're encouraged by the strong trends year to date and a solid 2Q delinquency exit, which together give us incremental confidence in near term portfolio behavior. That said, we continue to approach credit with caution and discipline given the current macroeconomic backdrop. Moving to average earning assets, we now anticipate balances to decline by around 2% year over year. Russell HutchinsonCFO at Ally Financial00:28:00Through the first half of the year, floor plan balances have been lower than expected due to tariff related announcements following our January guidance. Dealer inventory trends are choppy and difficult to predict. However, floor plan balances are supporting healthier dealer fundamentals, reinforcing our confidence in the credit quality of the portfolio. So in total, some moving pieces to our full year financial guidance, but we're on track or ahead of our performance expectations for the year. With that, I'll turn it back to Michael for a wrap up. Michael RhodesCEO & Director at Ally Financial00:28:34Thank you, Russ. Before we turn to Q and A, I'd like to close by highlighting a few key points on our strategic positioning. We've taken deliberate and decisive actions to fortify the foundation of this institution. This includes solidifying our capital and liquidity positions and reducing interest rate risk and credit risk. We maintain over $4,000,000,000 in excess capital above our regulatory minimum and stress capital buffer. Michael RhodesCEO & Director at Ally Financial00:29:05And both headline and fully phased in CET1 are meaningfully up year over year. This despite absorbing the final CECL phase in, changing the accounting method for EV tax credits, and redeploying capital to reposition the securities portfolio. We bolstered our capital position through non core business sales, including our point of sale lending and credit card portfolios. We enhanced our toolkit with credit risk transfers, which we plan to continue to use opportunistically going forward. On the liquidity front, we maintain over $66,000,000,000 in available liquidity, representing 5.9 times uninsured balances. Michael RhodesCEO & Director at Ally Financial00:29:49Deposits represent 90% of our interest bearing liabilities and 92% are FDIC insured, both among the highest in the industry. These efficient, stable deposits remain a key component in our strategy and overall profitability, enabling Ally to generate compelling returns. The deposits platform has created a uniquely strong funding profile and is a key differentiator for Ally. We have also materially reduced interest rate risk through a combination of our hedging program, securities repositioning, and continued remixing of the loan portfolio. On the credit side, we proactively reduced risk and volatility by eliminating exposure to higher risk unsecured consumer credit. Michael RhodesCEO & Director at Ally Financial00:30:39Within retail auto, we made targeted underwriting enhancements to strengthen credit performance while preserving strong yields and risk adjusted returns. These steps position us well to navigate potential headwinds from tariff related affordability pressures to the resumptions of student loan repayments and broader consumer health dynamics. We also made significant investments in our collection strategies, introducing targeted digital capabilities that improve customer engagement and payment behaviors. Through it all, we remain committed to rigorous cost discipline with controllable expense declining for a seventh consecutive quarter. At the same time, we continue to invest with intention, allocating expense dollars to areas that drive revenue growth and expand operating leverage. Michael RhodesCEO & Director at Ally Financial00:31:32This includes our insurance business. We are focused on driving profitable written premium growth. We're also prioritizing investments across other critical areas, enhancing cyber defenses, advancing AI capabilities, and developing innovative products, tools, and solutions that elevate the customer experience. This focus on cost control will continue to be a core pillar of our strategy as we remain mindful on how we deploy every dollar of shareholder capital. So let's pull all this together. Michael RhodesCEO & Director at Ally Financial00:32:06The actions we've taken to improve returns and reduce risk have meaningfully strengthened our foundation. As a result, we believe we are in the strongest strategic position we've been in as a public company. And with that, I'd like Sean LearyChief Financial Planning & Investor Relations Officer at Ally Financial00:32:21to turn over to Sean for Q and A. Thank you, Michael. As we head into Q and A, we do ask that participants limit yourself to one question and one follow-up. Daniel, please begin the Q and A. Operator00:32:55And our first question comes from Sanjay Sakhrani with KBW. Your line is open. Sanjay SakhraniManaging Director at Keefe, Bruyette & Woods (KBW)00:33:03Thank you. Good morning. My first question is on net interest margin. Obviously, good traction there. You've had a couple of headwinds and still saw very good performance in NIM. Sanjay SakhraniManaging Director at Keefe, Bruyette & Woods (KBW)00:33:16Russ, I got sort of the guidance you gave for the second half. I'm just curious what could lead you to outperform that expectation or underperform that expectation, sort of what's baked into your assumptions for the rate outlook in the second half? And then just specific to the 4% NIM target, like what's the timeline now that from this point onwards to get there? Russell HutchinsonCFO at Ally Financial00:33:43Great. Thanks for the question, Sanjay. Maybe I'll start with your question around kind of things that are driving the NIM outlook or the NIM guide for the year. And as we said on the call, second quarter expansion, particularly when you look at it, excluding the headwind from the card sale was particularly strong. And we had a number of items that are now baked into our NIM at $3.45, but that aren't expected to contribute to NIM expansion going forward. Russell HutchinsonCFO at Ally Financial00:34:15And so as we think about NIM expansion in the remainder of the year, I think you need to factor that in. So for example, we got eight basis points from the combination of the securities repositionings that we did towards the end of first quarter as well as the benefit we got from the recovery in lease termination performance. And there were some good guys also that we saw throughout the quarter associated with securities repayments as well as some acceleration in retail auto loan repayments that we think skewed towards higher credit, lower yielding customers who may have been going into the dealership to get new vehicles ahead of the implementation of tariffs. So we saw some good guys in the quarter. We also saw we also, I would say, would continue to expect benefits from liquid deposit repricing and CD repricing going forward, but probably not as big as what we saw in the second quarter. And so as you'll recall, we had reduced rate on liquids by 20 basis points in the first quarter. Russell HutchinsonCFO at Ally Financial00:35:27We saw the full effect of that in the second quarter. We also saw the benefit of CD repricing. So we had $23,000,000,000 of CDs reprice in the first half of the year with a repricing spread of about 100 basis points. We certainly expect to continue to benefit from both repricing on liquids and CDs, but smaller. And so you saw we had about a 10 basis point reduction in liquid pricing late in the second quarter. Russell HutchinsonCFO at Ally Financial00:35:58We'll benefit from that in the third quarter. We added to the supplemental some of the stats around CD repricing. And so you can see the volume of CDs repricing in the second half is smaller. But in addition, that repricing spread is also smaller as we go forward. And so we'll continue to benefit from all that, albeit at a smaller pace. Russell HutchinsonCFO at Ally Financial00:36:22As we think about the things that impact NIM positively or negatively with respect to our guide, as we've said before, we are asset sensitive in the very near term. We're liability sensitive in medium term. And so, to the extent that we see similar to what we saw last year in terms of frequent and significant cuts in the rate environment in a short period of time, that's something that's going to negatively impact us in the short term. As we think about what we factored into our rate outlook, we've considered a range of different paths for rates. Our base case assumes three cuts in the back half of this year and then additional cuts early in 2026. Russell HutchinsonCFO at Ally Financial00:37:15That being said, our guide for this year for 2025 is relatively insensitive to those cuts depending on assuming that they come late in the year. But obviously, to the extent that we see more significant cuts that could impact us certainly in the short term. Similar to last year, we'd expect that over the medium term, we get the benefit from those cuts as we are liability sensitive. And so as we realize our full deposit beta. And I would also point out in the quarter with the last cut in liquid pricing, did realize our 70% deposit beta. Russell HutchinsonCFO at Ally Financial00:37:53And so to the extent we saw bigger cuts than we expect, that's something we benefit from next year as well. Great. Last part of your question around the 4% guide. So post pro form a for the sale of card or post the sale of card, we're targeting towards the high threes, right? Remember, just taking into account that 20 basis point headwind from the card sale. Russell HutchinsonCFO at Ally Financial00:38:18We still feel very confident and comfortable with that outlook. As we've said before, we're not going to put a particular quarter on it, given that near term asset sensitivity that we've discussed. But again, we feel great about achieving that guide. And we think the momentum that we showed at this quarter, and I think the confidence that's expressed in our guide for the rest of the year, I think both all speak to that confidence. Sanjay SakhraniManaging Director at Keefe, Bruyette & Woods (KBW)00:38:49Thank you. Thank you for the detailed explanation. Michael, just one quick one for you. Obviously, credits seems better in control now with the 2022 and 2023 vintages kind of performing better. I'm just curious, do you feel like it might be time to lean in a little bit more towards growth? Sanjay SakhraniManaging Director at Keefe, Bruyette & Woods (KBW)00:39:08Or do you feel pretty good where you guys are at right now? Just trying to think about if you could get an acceleration in growth as a result of the underwriting stuff that you guys have done. Thanks. Michael RhodesCEO & Director at Ally Financial00:39:19Yes. No, Sanjay, great question. And this is overall on credit. The phrase I would use is we're encouraged by the trajectory in terms of what we're seeing. Clearly, delinquency performance on a year over year basis, look at the individual buckets, you look at some of our roll rate trends where used car values are holding up, it's all pointed to something encouraging. Michael RhodesCEO & Director at Ally Financial00:39:43That being the case, think you've heard us say before, we're going to be very disciplined and prudent when it comes to unwinding and the curtailment that we've undertaken. And so we're going be a bit data informed. There's still a lot of uncertainty in the environment and we're you can never get perfect clarity on a go forward basis, I know that. But we're going to be prudent to be data informed is the way I would view it. And so nothing to call right now, but if and when, we make the changes, we'll certainly be transparent about that. Sanjay SakhraniManaging Director at Keefe, Bruyette & Woods (KBW)00:40:17Thank you. Operator00:40:22Thank you. Our next question comes from Jeff Adelson with Morgan Stanley. Your line is now open. Jeffrey AdelsonExecutive Director at Morgan Stanley00:40:30Hey, good morning. Thanks for taking my questions. I just wanted to circle back on your credit trends. They certainly seem to be improving and inflecting here. I know, Michael, you just talked about some of the roll rates and used car prices. Jeffrey AdelsonExecutive Director at Morgan Stanley00:40:46But I guess just affordability concerns aside over the longer or medium term, should we be expecting used car prices to continue to help credit over the back half of the year. And I guess, I think you are still evaluating whether you want to maybe pare back the S tier a little bit more and get some more yield. But what would be the consideration at hand or the benchmarks you'd look at before you decide you want to lean a little bit back more into that below S tier tranche? Russell HutchinsonCFO at Ally Financial00:41:21Thanks, Jeff, and good morning. There's a lot in there to dissect in terms of that question. And so maybe I'll just start generally with our overall outlook around credit. And you mentioned used car prices. As we've said in prior discussions, think about credit in terms of kind of the given year in terms of really kind of three kind of broad variables. Russell HutchinsonCFO at Ally Financial00:41:45Our overall delinquency rates are flow to loss. And then of course, as you pointed out, used car prices. And I'd say all three of those things play into our expectations for a given year. And as Michael and I pointed out on the call, delinquencies have improved, but we'd still characterize them as elevated. And so that's certainly something that factors into how we think about the outlook going forward. Russell HutchinsonCFO at Ally Financial00:42:11Our flow to loss rates, obviously coming out of last year in the fourth quarter, so far this year have been really solid. And that's something that gives us a lot of encouragement. And we think that's a reflection of kind of the servicing strategy changes that we've made, as well as the vintage rollover to the newer vintages, kind of the '23, '24, and now the '25 vintages. And then as you pointed out, used car pricing has been strong. Part of that may in fact be related to the broader macro and tariffs in particular. Russell HutchinsonCFO at Ally Financial00:42:51But as we think about our credit guide for the year, we're kind of looking at really all three of those variables. And we've seen some encouraging signs over the last six months and the fourth quarter of last year in terms of all of those. And I'd say, we're looking forward to kind of continuation of improvement in delinquencies, strong flow to loss and used car prices. And those things give us a lot of confidence with the guide that we have in front of us. As Michael pointed out, as we look at kind of real time decisions around how we underwrite in terms of new originations, it's very much it's data driven. Russell HutchinsonCFO at Ally Financial00:43:33We're looking at recent vintage performance, and we're looking at a really granular level in terms of places where we kind of open and close and widen our approach on a micro segment basis. Jeffrey AdelsonExecutive Director at Morgan Stanley00:43:46Okay, great. Thanks, Russ. And if I could just sort of talk about capital return or ask about capital return. You've talked about the higher CET1 levels and consistent organic capital generation as a key factor in determining a return to share repurchase here. It does look like you're very close to that 10% CET1, which is a nice buffer from where you've targeted historically. Jeffrey AdelsonExecutive Director at Morgan Stanley00:44:07I know you still have that AOCI hit to deal with, but we've been asked by investors if next year's stress test is sort of the right barometer we'd be thinking about for capital return. Is that necessarily a gating factor you think about? Or maybe just talk a little bit about how you're thinking about capital return over the medium term here? Russell HutchinsonCFO at Ally Financial00:44:27Sure. Look, think the increase in our capital ratios over the course of the last year has been really encouraging. And as you pointed out, seeing real progress both in terms of our stated CET1 as well as our fully phased in CET1, which gives us a lot of encouragement. We're clearly moving in the right direction. And that combined with just improvement in our overall margins and earning profile and our ability to generate capital organically, give us a lot of confidence around kind of getting to the point where we can look at share repurchases. Russell HutchinsonCFO at Ally Financial00:45:02And as you know, that's a priority for this team. It's priority a for this company. As you think about the timing of that, we don't really think about it in terms of the stress test. I mean, if you look at our capital level now, at 9.9% CET1 versus CCAR requirement at 7.6%, we carry a considerable amount of excess capital related to that. And so we don't see that as a gating item. Russell HutchinsonCFO at Ally Financial00:45:30And so we're really looking towards our fully phased in CET1 ratio and our organic capital generation just based on the strength of our earnings. Those are really the two things that we're looking at in terms of kind of getting to the point where we can repurchase shares. Jeffrey AdelsonExecutive Director at Morgan Stanley00:45:50Okay, great. Thank you. Operator00:45:55Thank you. Our next question comes from Ryan Nash with Goldman Sachs. Your line is now open. Ryan NashMD - Regional Banks & Consumer Finance at Goldman Sachs00:46:03Hey, good morning, Michael. Good morning, Russ. Maybe just a follow-up on credit. So, it was good to see delinquencies, better delinquency performance, they're now down year over year. I guess sort of a two part question like, Russ, what will we need to see or what would it take to actually move the charge off rate range down? Ryan NashMD - Regional Banks & Consumer Finance at Goldman Sachs00:46:24And last quarter, you talked about shifting seasonality. Maybe just help us think about seasonality for the back half of the year on losses. Thank you. Russell HutchinsonCFO at Ally Financial00:46:33Sure. Thanks for the question, Ryan. Maybe kind of building on my answer to Jeff's question earlier, we've talked about these kind of three variables, the kind of delinquency rates, the flow to loss used car prices. And just to get your question directly in terms of what would we need to see to get to, you know, and maybe I'll characterize it, what would we need to see to get to the low end of our range? You know, I'd say, look, we'd have to see continued improvement in delinquency levels, continued strong flow to loss rates, and continued strong used car prices. Russell HutchinsonCFO at Ally Financial00:47:10Really a continuation of what we've been seeing so far this year. That being said, we have a guide that we have actually taken some of the high end of the guide off the table this quarter. But we do have a guide. And that guide entertains a range of potential outcomes. And the way I would characterize that is, even with the improvement we've seen in delinquency this quarter, we're still operating at elevated delinquencies. Russell HutchinsonCFO at Ally Financial00:47:41We're entering an environment where the general expectation is for unemployment to worsen. And so, as we look forward, we think about a range of potential outcomes, depending on kind of what could transpire in terms of delinquency, how flow to loss behaves, and all of that in the context of a macro that could weaken, in particular, with respect to unemployment, which is an important variable for us. So a lot that goes into kind of how we think about that guide. But again, we've taken 10 basis points off the top end of that. And so you should take that as an encouraging sign in terms of our building confidence around credit. Russell HutchinsonCFO at Ally Financial00:48:28On your question on seasonality, I think you're right to point out, seasonality has been changing post pandemic with kind of higher payments, with the cumulative effect of inflation over the last few years, we are seeing changes in seasonality. And I'd characterize it as seasonality is muted now relative to how it looked pre pandemic. We see kind of smaller dips moving from first quarter to second quarter in terms of NCO rates. And our expectation is to see smaller pickups as you move from second quarter through the back half of the year. And so we've taken that into account. Russell HutchinsonCFO at Ally Financial00:49:13We've updated our own models in terms of how we think about seasonality internally, and that's something that is baked into our NCO guidance for the remainder of the year. Ryan NashMD - Regional Banks & Consumer Finance at Goldman Sachs00:49:26Got it. And maybe as a follow-up, we saw seasonal declines in the deposit book, but we obviously had really nice repricing. Maybe just talk about the strategy on deposits from here. I know that there's been remixing within the portfolio. Were there further opportunities to optimize? Ryan NashMD - Regional Banks & Consumer Finance at Goldman Sachs00:49:49How are you thinking about the trade off between growth and price as we look to further easing that could be coming in the back half of the year? Thank you. Russell HutchinsonCFO at Ally Financial00:50:00Sure. Look, I'd characterize the quarter as kind of going exactly as expected. There's kind of really nothing notable that I would point to in the in the way the deposit book performed in the quarter. And and, you know, I'd say it it just reflects really solid performance across the board. So in terms of balances, as you pointed out, natural seasonality. Russell HutchinsonCFO at Ally Financial00:50:20As you know, this year, to 2024, we're managing for kind of full year flattish on deposits, which could be plus or minus one or a couple billion dollars. But we're managing towards flat similar to last year. And similar to last year, we saw very similar outflows during the second quarter. It's seasonality driven. It's a lot to do with the tax season. Russell HutchinsonCFO at Ally Financial00:50:46And so we look at that deposit balance performance as being very much consistent with what we're trying to do from a business perspective in terms of managing towards flat. On the pricing side, we feel pretty good about where we are from a pricing perspective. As we pointed out on the call, we achieved the 70% beta we targeted off of the Fed's rate cuts in the back part of last year. And so very much in line with with our expectations. And I'd I'd say the competitive environment has pretty much behaved pretty much accordingly. Russell HutchinsonCFO at Ally Financial00:51:23And so I I I'd say the quarter in terms of how we look at the performance in terms of both balances as well as in terms of pricing is very much behaving consistently with the strategy that we've been executing this year as well as last year. That being said, as you also pointed out, we have seen some shift and continued shift in terms of our deposit book, we've seen a shift perhaps away from some of our more rate sensitive customers and towards what we would characterize as our more engaged customer base. We think that's a good thing in terms of the migration of the book and points towards kind of greater deposit stability as we think about the book going forward. Ryan NashMD - Regional Banks & Consumer Finance at Goldman Sachs00:52:09Thanks for the color, Ross. Operator00:52:14Thank you. Our next question comes from Moshe Orenbuch with TD Cowen. Your line is open. Moshe OrenbuchMD & Senior Analyst at TD Cowen00:52:22Great, thanks. And I think the improvement in capital that you've shown has been pretty notable. I guess I'm kind of maybe you still talk about using these CRT transactions. I guess it's not clear to me what those would do for you at this point, given that they have a revenue cost. It seems like the alternative might be to try and continue to chip away at the AOCI and the maybe you could talk about how you're thinking about those tools as getting you closer to the point at which you could buy back stock. Russell HutchinsonCFO at Ally Financial00:53:00Yes. So maybe I'll start with CRTs. And what the CRTs effectively do is we're basically transferring credit risk related to a portion of the portfolio, you know, generally skewed towards kind of higher credit quality loans within the portfolio to the capital markets. You know, in exchange for that, we're able to lower the risk weighting on those loans. And so the benefit there is lower risk weighting, which effectively translates into a pickup in terms of CET1, both on a stated basis, as well as on a fully phased in basis. Russell HutchinsonCFO at Ally Financial00:53:42It's a very cost effective source of capital, if you kind of think about that CET1 pickup versus the cost of the effective capital markets insurance that we're picking up. We think it's a mid single digit cost of capital type venture. And so we think that's an economically attractive way of building capital and managing our book and preserving our capacity to both grow organically and to ultimately repurchase shares. And so we like the CRT. It's a tool that, again, as we said on the call, we expect to deploy over the back half of this year. Russell HutchinsonCFO at Ally Financial00:54:23And we think it will help us in terms of adding more to our CET1 ratios moving forward. As far as additional securities repositioning transactions, as we said coming out of the first quarter, we did we've done two securities repositioning transactions. We feel like we took out the low hanging fruit within our portfolio in terms of balancing what we were trying to achieve in terms of reducing our rate risk going forward and also getting some NIM pickup. And so we feel pretty good about what we have done. And we don't anticipate doing any more securities repositioning transactions certainly in the near term. Moshe OrenbuchMD & Senior Analyst at TD Cowen00:55:11Got it. And thanks. Sorry for this next one not being or being so kind of technically oriented. But maybe, Russ, could you talk a little bit more about the insurance business and what the renewal kind of means for profitability of the insurance business over the next year? How can you recover that in pricing and how we should kind of think about that? Thanks. Russell HutchinsonCFO at Ally Financial00:55:38Yeah. No, it's a great question. As you'd expect, renewal terms tightened on the back half of the experience that we saw in the last reinsurance cycle. And so effectively, the pricing is similar to last year, albeit at kind of higher deductibles or attachment points. And so that's something that we've baked into how we think about the insurance business going forward. Russell HutchinsonCFO at Ally Financial00:56:06The great thing about the insurance business is that those policies on the floor plan side, which is where we get impacted by weather, we reprice those annually. And so we're able to factor in kind of how we think about pricing in terms that we offer our dealers more broadly, kind of based on what we're seeing in the reinsurance market on a very real time basis. And so we continue to be very bullish on the insurance That's a business we're going to continue to invest in. It's accretive to our returns and it's a valuable source of non interest revenue for us. And so we're going to continue to invest in it and we think the returns there are very robust and very stable moving forward. Russell HutchinsonCFO at Ally Financial00:56:51So that's a business we just again, we continue to be very bullish on. Moshe OrenbuchMD & Senior Analyst at TD Cowen00:56:56Thank you. Operator00:57:01Thank you. Our next question comes from John Pancari with Evercore. Your line is open. John PancariSenior MD & Senior Research Analyst at Evercore ISI00:57:09Good morning. Just wanted to go back to the asset growth topic. I wanted to just ask a bit more about the current limitations on growth. I mean, I hear you regarding you're going to be selective about when you scale back your curtailment and your overall risk appetite. And then I know you have the mortgage loan runoff as headwinds as well, but we're still seeing some solid auto origination activity. John PancariSenior MD & Senior Research Analyst at Evercore ISI00:57:42The backdrop still seems conducive for auto growth. So could you remind us what are the greatest limitations as you look at the coming quarters, the greatest limitations on growth? Is it still the risk profile? Or is it the focus on returns over growth? Or is it your capital considerations? Thanks. Russell HutchinsonCFO at Ally Financial00:58:03Great. Maybe I'll start. And I imagine, Michael, you're going to want to comment on this as well. So I'll try and keep it brief. Look, I'd say if you look at that the second quarter, you saw the growth very much aligned with our focus strategy. Russell HutchinsonCFO at Ally Financial00:58:17And so you saw auto originations at $11,000,000,000 pick up from a year ago, strong pickup from our first quarter origination levels. Similarly, you saw growth in our corporate finance book at $11,000,000,000 up about $1,300,000,000 from prior year. And so again, you see growth focused exactly aligned with our strategy. And as you pointed out, we continue to see runoff in the mortgage book. We continue obviously, we saw the divestiture of the card business and the assets associated with that. Russell HutchinsonCFO at Ally Financial00:58:59And at the same time, you also saw our commercial floor plan balances somewhat muted. And that's really the main driver of the change in our guidance is kind of what we're seeing on the lot in terms of commercial floor plan balances. They've been muted. Certainly with tariffs, with all the activity on the dealer lots in the first half of the year, that's been helpful to the dealers in terms of their overall health. But it hit the balances somewhat. Russell HutchinsonCFO at Ally Financial00:59:31We're not concerned about that. In fact, again, it's a good thing in terms of dealer health and it actually contributes to their profitability as well as they don't have to carry around these large floor plan balances. So we feel good about it overall, but it has caused us to make this adjustment to our earning assets outlook for the year. And so again, I'd say what we saw in the quarter is very consistent with our focus on growing the retail auto loan and corporate finance books. And I would characterize that strategy as being one of prudent growth. Russell HutchinsonCFO at Ally Financial01:00:04And so with retail auto loans in particular, you saw it in terms of S tier continue to be north of 40%. The originated yield at 9.82%, again, very strong. And so, you know, you kinda see that that kind of prudence. And so I I think capital is not at this point what I would characterize as a limiting factor. I'd I'd I'd say it's, you know, it's more about being prudent about growing with an eye towards both credit as well as return and kind of getting the risk adjusted returns that we like. Michael RhodesCEO & Director at Ally Financial01:00:40Maybe Russ, maybe I'd just wrap up with a sort of doubling down this notion of being quite disciplined in terms of what we're doing. If I ladder off, take a look at the quarter. And like I'd say that we're very pleased with the quarter results and are encouraged by the trajectory that we're seeing. If you look at what we've delivered this quarter, I think it's real demonstrates this focused strategy and disciplined execution are working. You've probably heard over and over again, we've talked about three things that we're really focused on is net interest margin reducing auto credit losses and being disciplined in our expenses and our use of capital. Michael RhodesCEO & Director at Ally Financial01:01:18We delivered against all of those this quarter and I think the trajectory on a go forward basis is attractive. Look, with growth, we're going be very prudent. But I keep on anchoring back those three things that we're really focused on and we're quite pleased with the performance that we've seen with those. John PancariSenior MD & Senior Research Analyst at Evercore ISI01:01:35Got it. Okay. Thanks for that. I appreciate it. And just one more one quick follow-up just on competition. John PancariSenior MD & Senior Research Analyst at Evercore ISI01:01:42You saw the solid 9.8% retail origination yield. What's your expectation there in terms of the origination yield? And a lot of banks and other players are back in the auto game here. So what do you see in terms of implications for origination yield as you continue that? Russell HutchinsonCFO at Ally Financial01:02:02Yes. I'd say we did see banks coming in a little stronger during the quarter. We saw the overall kind of bank market share increase. We've seen some of our some of the banks that have reported already talk about their auto businesses specifically, a few of them have shown significant pickups in terms of origination volume during the quarter. That being said, and as you pointed out, John, we had a great quarter. Russell HutchinsonCFO at Ally Financial01:02:30We had record application volume. We had a strong yield actually up a couple of basis points from the first quarter and we continue to see strong originations in the S tier. And so we feel really great about where we play in the market. We think we're differentiated in terms of our relationships with dealers. I think our focus on used as well as prime and kind of where we play in the market is clearly kind of resonating with dealers and gives us some support in terms of being able to continue to be disciplined and grow our business as we kind of think about things going forward. Sean LearyChief Financial Planning & Investor Relations Officer at Ally Financial01:03:12Thanks, Russ. I'm showing a little past the hour here. So that's all the time that we have for today. If you have any additional questions, as always, please reach out to Investor Relations. Thank you for joining us this morning. This concludes today's call. Operator01:03:26This concludes today's conference call. Thank you for participating. You may now disconnect.Read moreParticipantsExecutivesSean LearyChief Financial Planning & Investor Relations OfficerMichael RhodesCEO & DirectorRussell HutchinsonCFOAnalystsSanjay SakhraniManaging Director at Keefe, Bruyette & Woods (KBW)Jeffrey AdelsonExecutive Director at Morgan StanleyRyan NashMD - Regional Banks & Consumer Finance at Goldman SachsMoshe OrenbuchMD & Senior Analyst at TD CowenJohn PancariSenior MD & Senior Research Analyst at Evercore ISIPowered by Earnings DocumentsSlide DeckPress Release(8-K) Ally Financial Earnings HeadlinesAlly Runs New Game Plan in WNBA All-Star Rookie DebutJuly 29 at 4:51 AM | msn.comCharlotte's expanding sports scene a winning formulaJuly 25, 2025 | bizjournals.comDon’t Miss This—Our Next Big Stock Pick Is Coming!Those who recognized the opportunity early didn’t hesitate—they took action. Now it’s your turn. We are about to release a brand-new report featuring a company with massive breakout potential. Here’s the best part: This report is 100% free. No hidden fees, no catch—just expert research designed to keep you ahead of the market.July 29 at 2:00 AM | Stock Wire News (Ad)Ally Invest Robo Portfolios Review 2025July 25, 2025 | msn.comAlly Financial price target raised to $45 from $44 at TruistJuly 25, 2025 | msn.comAlly Financial expands AI platform to 10,000+ employees, boosting efficiency across departmentsJuly 25, 2025 | bizjournals.comSee More Ally Financial Headlines Get Earnings Announcements in your inboxWant to stay updated on the latest earnings announcements and upcoming reports for companies like Ally Financial? Sign up for Earnings360's daily newsletter to receive timely earnings updates on Ally Financial and other key companies, straight to your email. Email Address About Ally FinancialAlly Financial (NYSE:ALLY), a digital financial-services company, provides various digital financial products and services in the United States, Canada, and Bermuda. The company operates through Automotive Finance Operations, Insurance Operations, Mortgage Finance Operations, and Corporate Finance Operations segments. The Automotive Finance Operations segment offers automotive financing services, including providing retail installment sales contracts, loans and operating leases, term loans to dealers, financing dealer floorplans and other lines of credit to dealers, warehouse lines to automotive retailers, and fleet financing. It also provides financing services to companies and municipalities for the purchase or lease of vehicles, and vehicle-remarketing services. The Insurance Operations segment offers consumer finance protection and insurance products through the automotive dealer channel, and commercial insurance products directly to dealers. This segment provides vehicle service and maintenance contract, and guaranteed asset protection products; and underwrites commercial insurance coverages, which primarily insure dealers' vehicle inventory. The Mortgage Finance Operations segment manages consumer mortgage loan portfolio that includes bulk purchases of jumbo and low-to-moderate income mortgage loans originated by third parties, as well as direct-to-consumer mortgage offerings. The Corporate Finance Operations segment provides senior secured leveraged cash flow and asset-based loans to middle market companies; leveraged loans; and commercial real estate product to serve companies in the nursing facilities, senior housing, and medical office buildings. It also offers commercial banking products and services. In addition, it provides securities brokerage and investment advisory services. The company was formerly known as GMAC Inc. and changed its name to Ally Financial Inc. in May 2010. 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PresentationSkip to Participants Operator00:00:00Good day and thank you for standing by. Welcome to the Q2 twenty twenty five Ally Financial Earnings Conference Call. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question and answer session. To ask a question during session, you will need to press 11 on your telephone. Operator00:00:21You will then hear an automated message advising your hand is raised. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Sean Leary, Head of Investor Relations. Please go ahead. Sean LearyChief Financial Planning & Investor Relations Officer at Ally Financial00:00:41Thank you, Daniel. Good morning and welcome to Ally Financial's second quarter twenty twenty five earnings call. This morning, our CEO, Michael Rhodes and our CFO, Russ Hutchinson will review Ally's results before taking questions. The presentation we'll reference can be found in the Investor Relations section of our website, ally.com. Forward looking statements and risk factor language governing today's call are on Page two. Sean LearyChief Financial Planning & Investor Relations Officer at Ally Financial00:01:06GAAP and non GAAP measures pertaining to our operating performance and capital results are on Slide three. As a reminder, GAAP or core metrics are supplemental to and not a substitute for U. S. GAAP measures. Definitions and reconciliations can be found in the appendix. Sean LearyChief Financial Planning & Investor Relations Officer at Ally Financial00:01:23And with that, I'll turn the call over to Michael. Michael RhodesCEO & Director at Ally Financial00:01:25Thank you, Sean. Good morning, everyone, and thank you for joining us for our second quarter earnings call. Let's begin on page four. I'll start by saying that I'm encouraged and energized by the progress we've made as an organization over the first half of the year. Our sound strategic positioning and disciplined execution are contributing to an improved financial trajectory, which is clearly reflected in our second quarter results. Michael RhodesCEO & Director at Ally Financial00:01:53In the second quarter, Ally delivered adjusted earnings per share of $0.99 and core pretax income of $418,000,000 We achieved double digit year over year growth in both metrics, underscoring the benefits of a more focused, streamlined and purpose driven institution. Net interest margin, excluding core OID was 3.45, expanding 10 basis points quarter over quarter, that's more than offsetting the 20 basis point drag related to the sale of the credit card business. We continue to run off low yielding mortgages and securities and add higher yielding retail auto and corporate finance assets, funded by high quality, stable and low cost deposits. This structural remixing of the balance sheet sets the foundation for continued margin expansion going forward. Our first half trajectory reinforces my conviction in our ability to deliver compelling and sustainable returns over time. Michael RhodesCEO & Director at Ally Financial00:03:01We delivered a core ROTCE of 13.6 in the quarter. But as you know, AOCI reduces the ROE denominator. Excluding that benefit, we generated core ROTCE of 10%. I'm pleased with the progress we've made and I'm even more encouraged by the momentum we're building. We recognize there's significant opportunity ahead, and we are well positioned to capitalize on it. Michael RhodesCEO & Director at Ally Financial00:03:30As I reflect on the quarter, there are three key takeaways that I will expand on. First, our sharp strategic focus is transforming Ally into a stronger, more profitable institution. Second, the Ally brand continues to resonate deeply with our customers, building loyalty and trust. And third, our customer centric culture remains one of our greatest differentiators. Our strategy remains clear and is being executed with discipline by our over 10,000 colleagues across the organization. Michael RhodesCEO & Director at Ally Financial00:04:07Our three core franchises are meaningfully differentiated with tremendous runway and scale. The new business we're putting on the balance sheet today is expected to generate a mid teens return over its life. In Dealer Financial Services, we're booking new fixed rate retail auto loans at nearly 10% funded by core deposits below 4% with expected annual losses between 1.61.8%. DFS also continues to benefit from strong fee revenue driven by our pass through and smart auction adjacencies. Our Insurance business continues to benefit from natural auto related synergies, leading to robust written premium growth and investment revenue. Michael RhodesCEO & Director at Ally Financial00:04:54In Corporate Finance, our portfolio has attractive floating rate yields and we continue to see healthy fee income from syndications. This business continues to deliver strong returns across different credit cycles, anchored by seasoned leadership and disciplined underwriting. Altogether, these businesses backed by strong deposits franchise are positioned to deliver mid teens returns. And now to our brand. Whether through strategic partnerships, impactful marketing, or deep community partnerships, the Ally name stands as a brand that is synonymous with trust and purpose. Michael RhodesCEO & Director at Ally Financial00:05:35Our Net Promoter Score remains well above industry averages, reflecting the strength of the relationships we built. Our customers are our greatest brand advocates. Roughly 15% of new deposit clients are sourced from our refer a friend program. A strong trusted brand is a powerful growth multiplier, And we are seeing that every day through efficient customer acquisition, strong retention, and deeper engagement. And finally, few reflections on our culture. Michael RhodesCEO & Director at Ally Financial00:06:09Do it right is more than a slogan. It's a shared ethos that shapes how we serve our customers, support our teammates, and show up in the communities we serve. We invest deliberately in nurturing our culture, and our results are clear. In fact, just last week, our latest employee engagement survey ranked us in the top 10 of all companies for the sixth consecutive year, eight points above the financial services industry benchmark. Beyond attracting and retaining top talent, this level of engagement fuels performance. Michael RhodesCEO & Director at Ally Financial00:06:45It accelerates change and enhances the customer experience, which is reflected in our customer service satisfaction rating, which is holding strong around 90%. With that context in place, let's turn to page five to dive into operational results and performance trends this quarter. Within our auto finance business, consumer originations of $11,000,000,000 were driven by 3,900,000 applications, marking our highest quarterly application volume ever for the second consecutive quarter. This sustained momentum of application flows speaks to the strength of our dealer relationships and the scale of our franchise and reinforces our position as the top bank auto lender in the country. Our scale enables us to be highly selective of the loans we book, optimizing both pricing and credit decisioning. Michael RhodesCEO & Director at Ally Financial00:07:43Origination yields of 9.82% were up slightly versus the prior quarter and down 77 basis points from the prior year. Notably, this decrease was more modest than the decline in benchmark rates, highlighting the relative strength in our pricing position. 42% of our originations come from the highest credit quality tier, which will continue to support strong risk adjusted returns moving forward. This quarter marked the ninth consecutive with over 40% S tier mix in new origination volume. As we've outlined in previous calls, we expect our origination mix to normalize gradually over time. Michael RhodesCEO & Director at Ally Financial00:08:28Our ability to dynamically adjust both price and risk appetite gives us the flexibility to evolve alongside market conditions. Let's turn to insurance, where our average dealer inventory exposure rose by 23% year over year, driven by new relationship wins and tight integration with our auto finance business. We have 3,900,000 active policies outstanding, an increase of over 1,000,000 since our IPO. Our insurance team supports 7,000 dealers across The United States and Canada and with access to a broader network, we see meaningful opportunity to grow our footprint. I'm pleased with the strong performance and the alignment between our auto and insurance businesses, which enhances the value proposition we offer our dealer customers. Michael RhodesCEO & Director at Ally Financial00:09:20In Corporate Finance, we delivered another strong quarter, generating a 31% ROE. Our long standing relationships with financial sponsors have supported solid growth with attractive returns, all while maintaining disciplined risk management. We continue to see opportunities for prudent organic growth within our current verticals and are actively exploring new products and solutions to generate incremental accretive business. Turning to our digital bank, we remain focused on delivering best in class digital experiences that empower customers to save, invest, and spend with confidence. With no hidden fees, an award winning mobile app, nationwide ATM rebates and 20 fourseven access to live customer care, our customer first approach sets us apart. Michael RhodesCEO & Director at Ally Financial00:10:16This commitment earned us multiple accolades again this quarter for customer satisfaction. Our robust suite of digital tools is driving deeper engagement, fueling customer loyalty, and reducing rate sensitivity. We proudly serve an all time high of 3,400,000 customers, marking sixty five consecutive quarters of net customer growth. We ended the quarter with balances of 143,000,000,000 reinforcing our position as the nation's largest all digital bank. Overall, deposit balances were down approximately $3,000,000,000 quarter over quarter. Michael RhodesCEO & Director at Ally Financial00:10:59Now this is aligned with our April guidance largely due to seasonal tax outflows. For the year, we continue to expect relatively flat balances, which is sufficient to support the asset side of our balance sheet. At the June, we lowered liquid savings pricing an additional 10 basis points, representing a cumulative 70% beta since the start of Fed easing cycle in the second half of twenty twenty four. Deposits are the foundation of our funding profile, representing nearly 90% of total funding and 92% are FDIC insured, demonstrating both strength and stability of our deposit base. Now before I turn it over to Russ, I'd like to leave you with this. Michael RhodesCEO & Director at Ally Financial00:11:47If there's one thing to take away from today's call, it's that Ally's focused strategy is working and you're starting to see it in our results. We have three market leading franchises with tremendous runway backed by an industry leading brand and a culture that sets us apart. And with that, I'll turn it over to Russ. Russell HutchinsonCFO at Ally Financial00:12:07Thank you, Michael, and good morning, everyone. Let's turn to Page six and walk through second quarter performance. Our financial results for the quarter reflect the closing of the sale of our credit card business on April 1. Accordingly, comparisons to both prior quarter and prior year impacted. Excluding core OID, net financing revenue totaled approximately $1,500,000,000 consistent with both the prior year and the prior quarter. Russell HutchinsonCFO at Ally Financial00:12:36We're seeing strong momentum in our core franchises led by continued yield expansion in our retail auto portfolio, strategic remixing of the balance sheet towards higher yielding asset classes and the ongoing optimization of deposit pricing. On a quarter over quarter basis, this momentum more than offset the lost revenue from the sale of credit card. Turning to adjusted other revenue, which totaled $531,000,000 results were approximately flat year over year as the removal of fee income from credit card and the wind down of our direct to consumer mortgage origination platform was offset by growth from insurance, smart auction and our pass through programs. Adjusted provision expense of $384,000,000 was down 23% to the prior quarter and down 16% year over year, primarily driven by the sale of credit cards. In retail auto, the NCO rate declined six basis points year over year to 1.75%. Russell HutchinsonCFO at Ally Financial00:13:39We are encouraged by the trends within the portfolio as vintage dynamics and servicing strategy enhancements continue to drive an improvement in losses. However, we remain mindful of macroeconomic uncertainty. I'll speak more about credit performance in a moment. Adjusted non interest expense was $1,300,000,000 down 4% sequentially and 2% to the prior year. Notably controllable expenses, which exclude insurance losses, commissions and FDIC fees were down for the seventh consecutive quarter underscoring our commitment to cost discipline. Russell HutchinsonCFO at Ally Financial00:14:16We do not expect a year over year decline in controllable expenses next quarter driven by non recurring benefits recorded in 2024. However, we remain committed to prudent expense management going forward. In the quarter, we recognized tax expense of $84,000,000 resulting in an effective tax rate for the quarter of 19%. This rate was favorably impacted by a recent state law change that drove a revaluation of certain tax credits. Looking ahead, we continue to expect a normalized effective tax rate in the range of 22% to 23%. Russell HutchinsonCFO at Ally Financial00:14:52However, discrete items may cause the effective rate to differ in any given quarter. On a GAAP basis, we generated earnings per share of $1.04 for the quarter. Adjusted earnings per share for the quarter was excluding OID was 3.45%, an increase of 10 basis points from the prior quarter. Margin expanded 30 basis points excluding the impact from the credit card sale, which was an approximate 20 basis point headwind in the quarter. On a quarter over quarter basis, NIM expansion was driven by the following: organic yield expansion in the retail auto loan portfolio normalization in retail auto lease yields following a loss on lease terminations in 1Q the benefit of securities repositioning transactions executed in March, deposit repricing across liquid savings and CDs and continued portfolio remixing to higher yielding retail auto and corporate finance assets. Russell HutchinsonCFO at Ally Financial00:15:54Some of these factors that are now embedded in our run rate NIM will not contribute to additional NIM expansion going forward. The normalization of lease gains and execution of securities repositioning transactions added eight basis points to the linked quarter margin expansion in 2Q, but are not expected to contribute to additional NIM expansion from here. Also, saw benefits from elevated securities runoff as well as higher auto prepayments, particularly in lower yielding loans likely tied to the pull forward of new vehicle sales. We expect to see continued margin expansion from liquid savings and CD repricing going forward, albeit at a slower pace than we saw in 2Q. In retail auto, excluding the hedge, portfolio yield expanded eight basis points quarter over quarter to 9.19%. Russell HutchinsonCFO at Ally Financial00:16:46As the lower yielding back book rolls down, we expect the portfolio yield to migrate towards originated yield over time. Turning to our retail auto lease portfolio, overall yield increased 119 basis points sequentially as lease remarketing gains normalized in line with our expectations. On the liability side, 2Q results reflected the full impact of reductions in liquid savings rates in the first quarter. In late June, we lowered liquid rates by 10 basis points to 3.5%, notably ahead of any upcoming Fed action, bringing cumulative liquid beta to 70%. Also in the quarter, we continue to benefit from a natural tailwind in CD repricing with $11,000,000,000 in maturities this quarter with strong retention and renewal rates. Russell HutchinsonCFO at Ally Financial00:17:35We're pleased with the momentum of the franchise, stability of the portfolio and the pricing power today. As we've covered previously, Ally is liability sensitive over the medium term, but asset sensitive in the very near term, driven by floating rate commercial loan and pay fixed hedge exposure. As a result, reductions in Fed funds, particularly material reductions like we saw in late twenty twenty four are a headwind to margin expansion in the near term. I'll cover the outlook in more detail later, but we remain confident in our ability to deliver a full year NIM of 3.4 to 3.5%. More importantly, we maintain conviction in our ability to achieve a sustainable margin in the upper 3s over the medium term. Russell HutchinsonCFO at Ally Financial00:18:21Turning to Page eight, our CET1 ratio of 9.9% represents more than $4,000,000,000 of excess capital above our SCB minimum. On a fully phased in basis for AOCI, CET1 for the period would have been 7.6%, an increase of 80 basis points from the prior year. Both measures include the 20 basis points of capital generated from the closing of the credit card transaction on April 1, a transaction that contributed 40 basis points of capital in total and enabled us to reposition a portion of the securities portfolio last quarter. While we did not execute a credit risk transfer transaction in the quarter, we continue to view CRT as an efficient way to generate excess capital that we will likely leverage in the second half of the year. Our capital management priorities remain unchanged. Russell HutchinsonCFO at Ally Financial00:19:13We are deploying capital to drive accretive growth in our core franchises, while continuing to move our stated and fully phased in CET1 levels higher. In terms of capital distributions, earlier this week, we announced a quarterly dividend of $0.30 per share for the third quarter of twenty twenty five, consistent with the prior quarter. Buying back shares, particularly at the current valuation remains a key capital management priority. The combination of higher CET1 levels, improved returns and consistent organic capital generation are key factors that will determine the appropriate time to repurchase shares. Turning to book value at the bottom of the page, adjusted tangible book value per share of $37 increased 12% from the prior year. Russell HutchinsonCFO at Ally Financial00:20:00Excluding the impacts of AOCI, adjusted tangible book value per share of $48 is up over 125% from 2014. We remain focused on growing tangible book value per share and driving shareholder value through disciplined capital management in the years ahead. Turning to Page nine, credit quality trends across all our lending portfolios remain encouraging. The consolidated net charge off rate was 110 basis points, a decline of 40 basis points to the prior quarter and a decrease of 16 basis points to the prior year. This quarter's consolidated net charge off rate reflects the impact of the card sale, which contributed to the year over year improvement. Russell HutchinsonCFO at Ally Financial00:20:43In retail auto, the net charge off rate was 175 basis points, down 37 basis points sequentially and six basis points year over year. This marks the second consecutive quarter of year over year improvement, reflecting strong performance from recent vintages and continued enhancements to our digital servicing capabilities. That said, we remain mindful of the elevated level of uncertainty that we are currently navigating. Moving to the top right of the page, thirty plus day all in delinquencies of 4.88% represents the first year over year improvement in delinquency rates since 2021, a positive inflection point for credit performance. Since delinquency trends are a leading indicator of charge offs, this improvement reinforces our constructive view on the near term loss trajectory. Russell HutchinsonCFO at Ally Financial00:21:33Vintage level delinquency performance trends are included in the supplemental section of the earnings presentation and are also disclosed in our 10 Q and 10 ks. We continue to observe stable and consistent delinquency performance trends across the 2022 and 2024 vintages and added the 2025 vintage to the disclosure. As we noted last quarter, the benefit of vintage rollover is clearly playing out in actuals. Looking holistically at credit measures, we remain encouraged by the performance of the portfolio and the effectiveness of our servicing strategies, but remain cautious of macroeconomic uncertainty going forward. Turning to the bottom of the page on reserves. Russell HutchinsonCFO at Ally Financial00:22:15Consolidated coverage increased one basis point this quarter, while the retail auto coverage rate remained flat at 3.75%. As we guided last quarter, the increase in the consolidated coverage rate was due to mix dynamics. Our retail auto coverage levels continue to balance the favorable credit trends we're seeing, namely improved delinquency rates and recent turnover in the portfolio to higher quality vintages against an uncertain macroeconomic outlook and the expectation of worsening unemployment. As we've consistently said, we do not forecast reserve releases and they are not incorporated into our mid teens return guidance. Moving to our auto finance segment on Page 10. Russell HutchinsonCFO at Ally Financial00:22:57Pretax income of $472,000,000 was $112,000,000 lower year over year, primarily driven by lower lease gains and a decline in commercial auto balances. Our lease remarketing performance improved quarter over quarter to approximately breakeven versus a loss in 1Q. Going forward, we expect remarketing performance to be less of a factor given the reduced volume of terminating units not covered by residual value guarantees. Commercial floor plan balances reflect industry trends and inventory levels, partly influenced by tariffs that likely pulled forward consumer demand. That said, while dealer inventory levels remain lower, increased sales activity and the financing of leaner inventories have continued to support overall dealer health and profitability. Russell HutchinsonCFO at Ally Financial00:23:46As illustrated on the bottom left, retail auto portfolio yields excluding the impact from hedges increased eight basis points quarter over quarter. As we noted, the portfolio yield will continue to migrate towards originated yields through time. Originated yield of 9.82% was up two basis points quarter over quarter with 42% of all retail volume coming from our highest credit tier. Turning to our insurance business on Page 11. We recorded a core pre tax loss of $2,000,000 as higher losses more than offset strong growth in premiums and investment revenue. Russell HutchinsonCFO at Ally Financial00:24:21Total written premiums of $349,000,000 were up $5,000,000 year over year and down $36,000,000 on a sequential basis. As a reminder, our annual excess of loss policy renews each April. This year's renewal came at a higher cost as we increased coverage levels in response to growth in the business. The associated premium paid for this policy is recognized as a reduction in written premium, which impacted results for the current period. Excluding the impact of excess of loss, written premiums increased 6% year over year. Russell HutchinsonCFO at Ally Financial00:24:56We continue to see great momentum across the business. The year over year increase in losses was primarily driven by an increase in exposure. Inventory exposure increased by $9,000,000,000 or 23% to the prior year. But importantly, our weather loss ratio remains in line with the five year historical second quarter average. Our reinsurance program continues to materially reduce weather exposure within the book. Russell HutchinsonCFO at Ally Financial00:25:22Looking ahead, our focus remains on leveraging relationships in auto finance and growing earned premiums over time. This remains a key driver of our long term capital efficient other revenue expansion. Corporate finance results are on Page 12. Core pre tax income of $96,000,000 reflected another strong quarter and translated to a 31% return on equity. Net financing revenue of $108,000,000 was up $4,000,000 quarter over quarter and down 4,000,000 year on year with the annual decline driven by lower amortized fee income. Russell HutchinsonCFO at Ally Financial00:25:59End of period HFI loans ended at $11,000,000,000 an increase of $1,300,000,000 year over year reflecting our focus on prudently growing the business. We had no new non performing loans and recorded no new specific reserves, a leading indicator of stable credit. Criticized assets and non accrual loan exposures were 101% of the total portfolio near historically low levels. The team has leveraged its longstanding relationships with financial sponsors along with the strategic expansion of our product suite to drive accretive, responsible loan growth even in a competitive market. Turning to Page 13, I'll close with a brief update on our financial outlook. Russell HutchinsonCFO at Ally Financial00:26:42We're pleased with the execution of our core franchises. Our financial performance through the first half of the year has been in line to better than we expected in January. On net interest margin, we have maintained our prior guidance range of 3.4% to 3.5%. We see a path to the upper half of that range based on current trends. Of course, the timing and magnitude of rate cuts will influence the exit rate given our near term asset sensitivity, but we remain confident that full year results will align with our guidance across a variety of interest rate scenarios. Russell HutchinsonCFO at Ally Financial00:27:18Turning to credit. We are narrowing the range of our retail auto net charge off guidance by 10 basis points to a range of 2% to 2.15%, which results in a full year consolidated net charge off outlook of 1.35% to 1.45%. We're encouraged by the strong trends year to date and a solid 2Q delinquency exit, which together give us incremental confidence in near term portfolio behavior. That said, we continue to approach credit with caution and discipline given the current macroeconomic backdrop. Moving to average earning assets, we now anticipate balances to decline by around 2% year over year. Russell HutchinsonCFO at Ally Financial00:28:00Through the first half of the year, floor plan balances have been lower than expected due to tariff related announcements following our January guidance. Dealer inventory trends are choppy and difficult to predict. However, floor plan balances are supporting healthier dealer fundamentals, reinforcing our confidence in the credit quality of the portfolio. So in total, some moving pieces to our full year financial guidance, but we're on track or ahead of our performance expectations for the year. With that, I'll turn it back to Michael for a wrap up. Michael RhodesCEO & Director at Ally Financial00:28:34Thank you, Russ. Before we turn to Q and A, I'd like to close by highlighting a few key points on our strategic positioning. We've taken deliberate and decisive actions to fortify the foundation of this institution. This includes solidifying our capital and liquidity positions and reducing interest rate risk and credit risk. We maintain over $4,000,000,000 in excess capital above our regulatory minimum and stress capital buffer. Michael RhodesCEO & Director at Ally Financial00:29:05And both headline and fully phased in CET1 are meaningfully up year over year. This despite absorbing the final CECL phase in, changing the accounting method for EV tax credits, and redeploying capital to reposition the securities portfolio. We bolstered our capital position through non core business sales, including our point of sale lending and credit card portfolios. We enhanced our toolkit with credit risk transfers, which we plan to continue to use opportunistically going forward. On the liquidity front, we maintain over $66,000,000,000 in available liquidity, representing 5.9 times uninsured balances. Michael RhodesCEO & Director at Ally Financial00:29:49Deposits represent 90% of our interest bearing liabilities and 92% are FDIC insured, both among the highest in the industry. These efficient, stable deposits remain a key component in our strategy and overall profitability, enabling Ally to generate compelling returns. The deposits platform has created a uniquely strong funding profile and is a key differentiator for Ally. We have also materially reduced interest rate risk through a combination of our hedging program, securities repositioning, and continued remixing of the loan portfolio. On the credit side, we proactively reduced risk and volatility by eliminating exposure to higher risk unsecured consumer credit. Michael RhodesCEO & Director at Ally Financial00:30:39Within retail auto, we made targeted underwriting enhancements to strengthen credit performance while preserving strong yields and risk adjusted returns. These steps position us well to navigate potential headwinds from tariff related affordability pressures to the resumptions of student loan repayments and broader consumer health dynamics. We also made significant investments in our collection strategies, introducing targeted digital capabilities that improve customer engagement and payment behaviors. Through it all, we remain committed to rigorous cost discipline with controllable expense declining for a seventh consecutive quarter. At the same time, we continue to invest with intention, allocating expense dollars to areas that drive revenue growth and expand operating leverage. Michael RhodesCEO & Director at Ally Financial00:31:32This includes our insurance business. We are focused on driving profitable written premium growth. We're also prioritizing investments across other critical areas, enhancing cyber defenses, advancing AI capabilities, and developing innovative products, tools, and solutions that elevate the customer experience. This focus on cost control will continue to be a core pillar of our strategy as we remain mindful on how we deploy every dollar of shareholder capital. So let's pull all this together. Michael RhodesCEO & Director at Ally Financial00:32:06The actions we've taken to improve returns and reduce risk have meaningfully strengthened our foundation. As a result, we believe we are in the strongest strategic position we've been in as a public company. And with that, I'd like Sean LearyChief Financial Planning & Investor Relations Officer at Ally Financial00:32:21to turn over to Sean for Q and A. Thank you, Michael. As we head into Q and A, we do ask that participants limit yourself to one question and one follow-up. Daniel, please begin the Q and A. Operator00:32:55And our first question comes from Sanjay Sakhrani with KBW. Your line is open. Sanjay SakhraniManaging Director at Keefe, Bruyette & Woods (KBW)00:33:03Thank you. Good morning. My first question is on net interest margin. Obviously, good traction there. You've had a couple of headwinds and still saw very good performance in NIM. Sanjay SakhraniManaging Director at Keefe, Bruyette & Woods (KBW)00:33:16Russ, I got sort of the guidance you gave for the second half. I'm just curious what could lead you to outperform that expectation or underperform that expectation, sort of what's baked into your assumptions for the rate outlook in the second half? And then just specific to the 4% NIM target, like what's the timeline now that from this point onwards to get there? Russell HutchinsonCFO at Ally Financial00:33:43Great. Thanks for the question, Sanjay. Maybe I'll start with your question around kind of things that are driving the NIM outlook or the NIM guide for the year. And as we said on the call, second quarter expansion, particularly when you look at it, excluding the headwind from the card sale was particularly strong. And we had a number of items that are now baked into our NIM at $3.45, but that aren't expected to contribute to NIM expansion going forward. Russell HutchinsonCFO at Ally Financial00:34:15And so as we think about NIM expansion in the remainder of the year, I think you need to factor that in. So for example, we got eight basis points from the combination of the securities repositionings that we did towards the end of first quarter as well as the benefit we got from the recovery in lease termination performance. And there were some good guys also that we saw throughout the quarter associated with securities repayments as well as some acceleration in retail auto loan repayments that we think skewed towards higher credit, lower yielding customers who may have been going into the dealership to get new vehicles ahead of the implementation of tariffs. So we saw some good guys in the quarter. We also saw we also, I would say, would continue to expect benefits from liquid deposit repricing and CD repricing going forward, but probably not as big as what we saw in the second quarter. And so as you'll recall, we had reduced rate on liquids by 20 basis points in the first quarter. Russell HutchinsonCFO at Ally Financial00:35:27We saw the full effect of that in the second quarter. We also saw the benefit of CD repricing. So we had $23,000,000,000 of CDs reprice in the first half of the year with a repricing spread of about 100 basis points. We certainly expect to continue to benefit from both repricing on liquids and CDs, but smaller. And so you saw we had about a 10 basis point reduction in liquid pricing late in the second quarter. Russell HutchinsonCFO at Ally Financial00:35:58We'll benefit from that in the third quarter. We added to the supplemental some of the stats around CD repricing. And so you can see the volume of CDs repricing in the second half is smaller. But in addition, that repricing spread is also smaller as we go forward. And so we'll continue to benefit from all that, albeit at a smaller pace. Russell HutchinsonCFO at Ally Financial00:36:22As we think about the things that impact NIM positively or negatively with respect to our guide, as we've said before, we are asset sensitive in the very near term. We're liability sensitive in medium term. And so, to the extent that we see similar to what we saw last year in terms of frequent and significant cuts in the rate environment in a short period of time, that's something that's going to negatively impact us in the short term. As we think about what we factored into our rate outlook, we've considered a range of different paths for rates. Our base case assumes three cuts in the back half of this year and then additional cuts early in 2026. Russell HutchinsonCFO at Ally Financial00:37:15That being said, our guide for this year for 2025 is relatively insensitive to those cuts depending on assuming that they come late in the year. But obviously, to the extent that we see more significant cuts that could impact us certainly in the short term. Similar to last year, we'd expect that over the medium term, we get the benefit from those cuts as we are liability sensitive. And so as we realize our full deposit beta. And I would also point out in the quarter with the last cut in liquid pricing, did realize our 70% deposit beta. Russell HutchinsonCFO at Ally Financial00:37:53And so to the extent we saw bigger cuts than we expect, that's something we benefit from next year as well. Great. Last part of your question around the 4% guide. So post pro form a for the sale of card or post the sale of card, we're targeting towards the high threes, right? Remember, just taking into account that 20 basis point headwind from the card sale. Russell HutchinsonCFO at Ally Financial00:38:18We still feel very confident and comfortable with that outlook. As we've said before, we're not going to put a particular quarter on it, given that near term asset sensitivity that we've discussed. But again, we feel great about achieving that guide. And we think the momentum that we showed at this quarter, and I think the confidence that's expressed in our guide for the rest of the year, I think both all speak to that confidence. Sanjay SakhraniManaging Director at Keefe, Bruyette & Woods (KBW)00:38:49Thank you. Thank you for the detailed explanation. Michael, just one quick one for you. Obviously, credits seems better in control now with the 2022 and 2023 vintages kind of performing better. I'm just curious, do you feel like it might be time to lean in a little bit more towards growth? Sanjay SakhraniManaging Director at Keefe, Bruyette & Woods (KBW)00:39:08Or do you feel pretty good where you guys are at right now? Just trying to think about if you could get an acceleration in growth as a result of the underwriting stuff that you guys have done. Thanks. Michael RhodesCEO & Director at Ally Financial00:39:19Yes. No, Sanjay, great question. And this is overall on credit. The phrase I would use is we're encouraged by the trajectory in terms of what we're seeing. Clearly, delinquency performance on a year over year basis, look at the individual buckets, you look at some of our roll rate trends where used car values are holding up, it's all pointed to something encouraging. Michael RhodesCEO & Director at Ally Financial00:39:43That being the case, think you've heard us say before, we're going to be very disciplined and prudent when it comes to unwinding and the curtailment that we've undertaken. And so we're going be a bit data informed. There's still a lot of uncertainty in the environment and we're you can never get perfect clarity on a go forward basis, I know that. But we're going to be prudent to be data informed is the way I would view it. And so nothing to call right now, but if and when, we make the changes, we'll certainly be transparent about that. Sanjay SakhraniManaging Director at Keefe, Bruyette & Woods (KBW)00:40:17Thank you. Operator00:40:22Thank you. Our next question comes from Jeff Adelson with Morgan Stanley. Your line is now open. Jeffrey AdelsonExecutive Director at Morgan Stanley00:40:30Hey, good morning. Thanks for taking my questions. I just wanted to circle back on your credit trends. They certainly seem to be improving and inflecting here. I know, Michael, you just talked about some of the roll rates and used car prices. Jeffrey AdelsonExecutive Director at Morgan Stanley00:40:46But I guess just affordability concerns aside over the longer or medium term, should we be expecting used car prices to continue to help credit over the back half of the year. And I guess, I think you are still evaluating whether you want to maybe pare back the S tier a little bit more and get some more yield. But what would be the consideration at hand or the benchmarks you'd look at before you decide you want to lean a little bit back more into that below S tier tranche? Russell HutchinsonCFO at Ally Financial00:41:21Thanks, Jeff, and good morning. There's a lot in there to dissect in terms of that question. And so maybe I'll just start generally with our overall outlook around credit. And you mentioned used car prices. As we've said in prior discussions, think about credit in terms of kind of the given year in terms of really kind of three kind of broad variables. Russell HutchinsonCFO at Ally Financial00:41:45Our overall delinquency rates are flow to loss. And then of course, as you pointed out, used car prices. And I'd say all three of those things play into our expectations for a given year. And as Michael and I pointed out on the call, delinquencies have improved, but we'd still characterize them as elevated. And so that's certainly something that factors into how we think about the outlook going forward. Russell HutchinsonCFO at Ally Financial00:42:11Our flow to loss rates, obviously coming out of last year in the fourth quarter, so far this year have been really solid. And that's something that gives us a lot of encouragement. And we think that's a reflection of kind of the servicing strategy changes that we've made, as well as the vintage rollover to the newer vintages, kind of the '23, '24, and now the '25 vintages. And then as you pointed out, used car pricing has been strong. Part of that may in fact be related to the broader macro and tariffs in particular. Russell HutchinsonCFO at Ally Financial00:42:51But as we think about our credit guide for the year, we're kind of looking at really all three of those variables. And we've seen some encouraging signs over the last six months and the fourth quarter of last year in terms of all of those. And I'd say, we're looking forward to kind of continuation of improvement in delinquencies, strong flow to loss and used car prices. And those things give us a lot of confidence with the guide that we have in front of us. As Michael pointed out, as we look at kind of real time decisions around how we underwrite in terms of new originations, it's very much it's data driven. Russell HutchinsonCFO at Ally Financial00:43:33We're looking at recent vintage performance, and we're looking at a really granular level in terms of places where we kind of open and close and widen our approach on a micro segment basis. Jeffrey AdelsonExecutive Director at Morgan Stanley00:43:46Okay, great. Thanks, Russ. And if I could just sort of talk about capital return or ask about capital return. You've talked about the higher CET1 levels and consistent organic capital generation as a key factor in determining a return to share repurchase here. It does look like you're very close to that 10% CET1, which is a nice buffer from where you've targeted historically. Jeffrey AdelsonExecutive Director at Morgan Stanley00:44:07I know you still have that AOCI hit to deal with, but we've been asked by investors if next year's stress test is sort of the right barometer we'd be thinking about for capital return. Is that necessarily a gating factor you think about? Or maybe just talk a little bit about how you're thinking about capital return over the medium term here? Russell HutchinsonCFO at Ally Financial00:44:27Sure. Look, think the increase in our capital ratios over the course of the last year has been really encouraging. And as you pointed out, seeing real progress both in terms of our stated CET1 as well as our fully phased in CET1, which gives us a lot of encouragement. We're clearly moving in the right direction. And that combined with just improvement in our overall margins and earning profile and our ability to generate capital organically, give us a lot of confidence around kind of getting to the point where we can look at share repurchases. Russell HutchinsonCFO at Ally Financial00:45:02And as you know, that's a priority for this team. It's priority a for this company. As you think about the timing of that, we don't really think about it in terms of the stress test. I mean, if you look at our capital level now, at 9.9% CET1 versus CCAR requirement at 7.6%, we carry a considerable amount of excess capital related to that. And so we don't see that as a gating item. Russell HutchinsonCFO at Ally Financial00:45:30And so we're really looking towards our fully phased in CET1 ratio and our organic capital generation just based on the strength of our earnings. Those are really the two things that we're looking at in terms of kind of getting to the point where we can repurchase shares. Jeffrey AdelsonExecutive Director at Morgan Stanley00:45:50Okay, great. Thank you. Operator00:45:55Thank you. Our next question comes from Ryan Nash with Goldman Sachs. Your line is now open. Ryan NashMD - Regional Banks & Consumer Finance at Goldman Sachs00:46:03Hey, good morning, Michael. Good morning, Russ. Maybe just a follow-up on credit. So, it was good to see delinquencies, better delinquency performance, they're now down year over year. I guess sort of a two part question like, Russ, what will we need to see or what would it take to actually move the charge off rate range down? Ryan NashMD - Regional Banks & Consumer Finance at Goldman Sachs00:46:24And last quarter, you talked about shifting seasonality. Maybe just help us think about seasonality for the back half of the year on losses. Thank you. Russell HutchinsonCFO at Ally Financial00:46:33Sure. Thanks for the question, Ryan. Maybe kind of building on my answer to Jeff's question earlier, we've talked about these kind of three variables, the kind of delinquency rates, the flow to loss used car prices. And just to get your question directly in terms of what would we need to see to get to, you know, and maybe I'll characterize it, what would we need to see to get to the low end of our range? You know, I'd say, look, we'd have to see continued improvement in delinquency levels, continued strong flow to loss rates, and continued strong used car prices. Russell HutchinsonCFO at Ally Financial00:47:10Really a continuation of what we've been seeing so far this year. That being said, we have a guide that we have actually taken some of the high end of the guide off the table this quarter. But we do have a guide. And that guide entertains a range of potential outcomes. And the way I would characterize that is, even with the improvement we've seen in delinquency this quarter, we're still operating at elevated delinquencies. Russell HutchinsonCFO at Ally Financial00:47:41We're entering an environment where the general expectation is for unemployment to worsen. And so, as we look forward, we think about a range of potential outcomes, depending on kind of what could transpire in terms of delinquency, how flow to loss behaves, and all of that in the context of a macro that could weaken, in particular, with respect to unemployment, which is an important variable for us. So a lot that goes into kind of how we think about that guide. But again, we've taken 10 basis points off the top end of that. And so you should take that as an encouraging sign in terms of our building confidence around credit. Russell HutchinsonCFO at Ally Financial00:48:28On your question on seasonality, I think you're right to point out, seasonality has been changing post pandemic with kind of higher payments, with the cumulative effect of inflation over the last few years, we are seeing changes in seasonality. And I'd characterize it as seasonality is muted now relative to how it looked pre pandemic. We see kind of smaller dips moving from first quarter to second quarter in terms of NCO rates. And our expectation is to see smaller pickups as you move from second quarter through the back half of the year. And so we've taken that into account. Russell HutchinsonCFO at Ally Financial00:49:13We've updated our own models in terms of how we think about seasonality internally, and that's something that is baked into our NCO guidance for the remainder of the year. Ryan NashMD - Regional Banks & Consumer Finance at Goldman Sachs00:49:26Got it. And maybe as a follow-up, we saw seasonal declines in the deposit book, but we obviously had really nice repricing. Maybe just talk about the strategy on deposits from here. I know that there's been remixing within the portfolio. Were there further opportunities to optimize? Ryan NashMD - Regional Banks & Consumer Finance at Goldman Sachs00:49:49How are you thinking about the trade off between growth and price as we look to further easing that could be coming in the back half of the year? Thank you. Russell HutchinsonCFO at Ally Financial00:50:00Sure. Look, I'd characterize the quarter as kind of going exactly as expected. There's kind of really nothing notable that I would point to in the in the way the deposit book performed in the quarter. And and, you know, I'd say it it just reflects really solid performance across the board. So in terms of balances, as you pointed out, natural seasonality. Russell HutchinsonCFO at Ally Financial00:50:20As you know, this year, to 2024, we're managing for kind of full year flattish on deposits, which could be plus or minus one or a couple billion dollars. But we're managing towards flat similar to last year. And similar to last year, we saw very similar outflows during the second quarter. It's seasonality driven. It's a lot to do with the tax season. Russell HutchinsonCFO at Ally Financial00:50:46And so we look at that deposit balance performance as being very much consistent with what we're trying to do from a business perspective in terms of managing towards flat. On the pricing side, we feel pretty good about where we are from a pricing perspective. As we pointed out on the call, we achieved the 70% beta we targeted off of the Fed's rate cuts in the back part of last year. And so very much in line with with our expectations. And I'd I'd say the competitive environment has pretty much behaved pretty much accordingly. Russell HutchinsonCFO at Ally Financial00:51:23And so I I I'd say the quarter in terms of how we look at the performance in terms of both balances as well as in terms of pricing is very much behaving consistently with the strategy that we've been executing this year as well as last year. That being said, as you also pointed out, we have seen some shift and continued shift in terms of our deposit book, we've seen a shift perhaps away from some of our more rate sensitive customers and towards what we would characterize as our more engaged customer base. We think that's a good thing in terms of the migration of the book and points towards kind of greater deposit stability as we think about the book going forward. Ryan NashMD - Regional Banks & Consumer Finance at Goldman Sachs00:52:09Thanks for the color, Ross. Operator00:52:14Thank you. Our next question comes from Moshe Orenbuch with TD Cowen. Your line is open. Moshe OrenbuchMD & Senior Analyst at TD Cowen00:52:22Great, thanks. And I think the improvement in capital that you've shown has been pretty notable. I guess I'm kind of maybe you still talk about using these CRT transactions. I guess it's not clear to me what those would do for you at this point, given that they have a revenue cost. It seems like the alternative might be to try and continue to chip away at the AOCI and the maybe you could talk about how you're thinking about those tools as getting you closer to the point at which you could buy back stock. Russell HutchinsonCFO at Ally Financial00:53:00Yes. So maybe I'll start with CRTs. And what the CRTs effectively do is we're basically transferring credit risk related to a portion of the portfolio, you know, generally skewed towards kind of higher credit quality loans within the portfolio to the capital markets. You know, in exchange for that, we're able to lower the risk weighting on those loans. And so the benefit there is lower risk weighting, which effectively translates into a pickup in terms of CET1, both on a stated basis, as well as on a fully phased in basis. Russell HutchinsonCFO at Ally Financial00:53:42It's a very cost effective source of capital, if you kind of think about that CET1 pickup versus the cost of the effective capital markets insurance that we're picking up. We think it's a mid single digit cost of capital type venture. And so we think that's an economically attractive way of building capital and managing our book and preserving our capacity to both grow organically and to ultimately repurchase shares. And so we like the CRT. It's a tool that, again, as we said on the call, we expect to deploy over the back half of this year. Russell HutchinsonCFO at Ally Financial00:54:23And we think it will help us in terms of adding more to our CET1 ratios moving forward. As far as additional securities repositioning transactions, as we said coming out of the first quarter, we did we've done two securities repositioning transactions. We feel like we took out the low hanging fruit within our portfolio in terms of balancing what we were trying to achieve in terms of reducing our rate risk going forward and also getting some NIM pickup. And so we feel pretty good about what we have done. And we don't anticipate doing any more securities repositioning transactions certainly in the near term. Moshe OrenbuchMD & Senior Analyst at TD Cowen00:55:11Got it. And thanks. Sorry for this next one not being or being so kind of technically oriented. But maybe, Russ, could you talk a little bit more about the insurance business and what the renewal kind of means for profitability of the insurance business over the next year? How can you recover that in pricing and how we should kind of think about that? Thanks. Russell HutchinsonCFO at Ally Financial00:55:38Yeah. No, it's a great question. As you'd expect, renewal terms tightened on the back half of the experience that we saw in the last reinsurance cycle. And so effectively, the pricing is similar to last year, albeit at kind of higher deductibles or attachment points. And so that's something that we've baked into how we think about the insurance business going forward. Russell HutchinsonCFO at Ally Financial00:56:06The great thing about the insurance business is that those policies on the floor plan side, which is where we get impacted by weather, we reprice those annually. And so we're able to factor in kind of how we think about pricing in terms that we offer our dealers more broadly, kind of based on what we're seeing in the reinsurance market on a very real time basis. And so we continue to be very bullish on the insurance That's a business we're going to continue to invest in. It's accretive to our returns and it's a valuable source of non interest revenue for us. And so we're going to continue to invest in it and we think the returns there are very robust and very stable moving forward. Russell HutchinsonCFO at Ally Financial00:56:51So that's a business we just again, we continue to be very bullish on. Moshe OrenbuchMD & Senior Analyst at TD Cowen00:56:56Thank you. Operator00:57:01Thank you. Our next question comes from John Pancari with Evercore. Your line is open. John PancariSenior MD & Senior Research Analyst at Evercore ISI00:57:09Good morning. Just wanted to go back to the asset growth topic. I wanted to just ask a bit more about the current limitations on growth. I mean, I hear you regarding you're going to be selective about when you scale back your curtailment and your overall risk appetite. And then I know you have the mortgage loan runoff as headwinds as well, but we're still seeing some solid auto origination activity. John PancariSenior MD & Senior Research Analyst at Evercore ISI00:57:42The backdrop still seems conducive for auto growth. So could you remind us what are the greatest limitations as you look at the coming quarters, the greatest limitations on growth? Is it still the risk profile? Or is it the focus on returns over growth? Or is it your capital considerations? Thanks. Russell HutchinsonCFO at Ally Financial00:58:03Great. Maybe I'll start. And I imagine, Michael, you're going to want to comment on this as well. So I'll try and keep it brief. Look, I'd say if you look at that the second quarter, you saw the growth very much aligned with our focus strategy. Russell HutchinsonCFO at Ally Financial00:58:17And so you saw auto originations at $11,000,000,000 pick up from a year ago, strong pickup from our first quarter origination levels. Similarly, you saw growth in our corporate finance book at $11,000,000,000 up about $1,300,000,000 from prior year. And so again, you see growth focused exactly aligned with our strategy. And as you pointed out, we continue to see runoff in the mortgage book. We continue obviously, we saw the divestiture of the card business and the assets associated with that. Russell HutchinsonCFO at Ally Financial00:58:59And at the same time, you also saw our commercial floor plan balances somewhat muted. And that's really the main driver of the change in our guidance is kind of what we're seeing on the lot in terms of commercial floor plan balances. They've been muted. Certainly with tariffs, with all the activity on the dealer lots in the first half of the year, that's been helpful to the dealers in terms of their overall health. But it hit the balances somewhat. Russell HutchinsonCFO at Ally Financial00:59:31We're not concerned about that. In fact, again, it's a good thing in terms of dealer health and it actually contributes to their profitability as well as they don't have to carry around these large floor plan balances. So we feel good about it overall, but it has caused us to make this adjustment to our earning assets outlook for the year. And so again, I'd say what we saw in the quarter is very consistent with our focus on growing the retail auto loan and corporate finance books. And I would characterize that strategy as being one of prudent growth. Russell HutchinsonCFO at Ally Financial01:00:04And so with retail auto loans in particular, you saw it in terms of S tier continue to be north of 40%. The originated yield at 9.82%, again, very strong. And so, you know, you kinda see that that kind of prudence. And so I I think capital is not at this point what I would characterize as a limiting factor. I'd I'd I'd say it's, you know, it's more about being prudent about growing with an eye towards both credit as well as return and kind of getting the risk adjusted returns that we like. Michael RhodesCEO & Director at Ally Financial01:00:40Maybe Russ, maybe I'd just wrap up with a sort of doubling down this notion of being quite disciplined in terms of what we're doing. If I ladder off, take a look at the quarter. And like I'd say that we're very pleased with the quarter results and are encouraged by the trajectory that we're seeing. If you look at what we've delivered this quarter, I think it's real demonstrates this focused strategy and disciplined execution are working. You've probably heard over and over again, we've talked about three things that we're really focused on is net interest margin reducing auto credit losses and being disciplined in our expenses and our use of capital. Michael RhodesCEO & Director at Ally Financial01:01:18We delivered against all of those this quarter and I think the trajectory on a go forward basis is attractive. Look, with growth, we're going be very prudent. But I keep on anchoring back those three things that we're really focused on and we're quite pleased with the performance that we've seen with those. John PancariSenior MD & Senior Research Analyst at Evercore ISI01:01:35Got it. Okay. Thanks for that. I appreciate it. And just one more one quick follow-up just on competition. John PancariSenior MD & Senior Research Analyst at Evercore ISI01:01:42You saw the solid 9.8% retail origination yield. What's your expectation there in terms of the origination yield? And a lot of banks and other players are back in the auto game here. So what do you see in terms of implications for origination yield as you continue that? Russell HutchinsonCFO at Ally Financial01:02:02Yes. I'd say we did see banks coming in a little stronger during the quarter. We saw the overall kind of bank market share increase. We've seen some of our some of the banks that have reported already talk about their auto businesses specifically, a few of them have shown significant pickups in terms of origination volume during the quarter. That being said, and as you pointed out, John, we had a great quarter. Russell HutchinsonCFO at Ally Financial01:02:30We had record application volume. We had a strong yield actually up a couple of basis points from the first quarter and we continue to see strong originations in the S tier. And so we feel really great about where we play in the market. We think we're differentiated in terms of our relationships with dealers. I think our focus on used as well as prime and kind of where we play in the market is clearly kind of resonating with dealers and gives us some support in terms of being able to continue to be disciplined and grow our business as we kind of think about things going forward. Sean LearyChief Financial Planning & Investor Relations Officer at Ally Financial01:03:12Thanks, Russ. I'm showing a little past the hour here. So that's all the time that we have for today. If you have any additional questions, as always, please reach out to Investor Relations. Thank you for joining us this morning. This concludes today's call. Operator01:03:26This concludes today's conference call. Thank you for participating. You may now disconnect.Read moreParticipantsExecutivesSean LearyChief Financial Planning & Investor Relations OfficerMichael RhodesCEO & DirectorRussell HutchinsonCFOAnalystsSanjay SakhraniManaging Director at Keefe, Bruyette & Woods (KBW)Jeffrey AdelsonExecutive Director at Morgan StanleyRyan NashMD - Regional Banks & Consumer Finance at Goldman SachsMoshe OrenbuchMD & Senior Analyst at TD CowenJohn PancariSenior MD & Senior Research Analyst at Evercore ISIPowered by