Financial Performance - For the three months ended September 30, 2024, Ally Financial reported net income from continuing operations of $357 million, an increase of 20.6% compared to $296 million in the same period of 2023[10]. - Total net revenue for the three months ended September 30, 2024, was $2.103 billion, compared to $1.968 billion in the same period of 2023, marking an increase of 6.9%[10]. - Net income for the nine months ended September 30, 2024, was $808 million, down from $944 million for the same period in 2023, reflecting a decrease of about 14.4%[25]. - Net income attributable to common stockholders for the nine months ended September 30, 2024, was $725 million, down from $862 million in 2023, a decrease of 15.9%[194]. - Ally Financial's diluted earnings per common share for the three months ended September 30, 2024, was $1.06, up from $0.88 in the same period of 2023, representing a growth of 20.5%[12]. - Basic earnings per common share for the three months ended September 30, 2024, was $1.07, compared to $0.88 in 2023, reflecting a 21.6% increase[194]. Revenue and Income Sources - Total financing revenue and other interest income for the nine months ended September 30, 2024, was $10.694 billion, up from $10.335 billion in the same period of 2023, reflecting a growth of 3.5%[10]. - For the three months ended September 30, 2024, total revenue from contracts with customers was $319 million, with noninsurance contracts contributing $246 million[57]. - During the nine months ended September 30, 2024, total revenue from contracts with customers reached $887 million, with noninsurance contracts accounting for $666 million[60]. - Ally Financial's total other revenue for the nine months ended September 30, 2024, was $1.650 billion, with all other revenue contributing $763 million[60]. Assets and Liabilities - Total assets as of September 30, 2024, were $192.981 billion, a decrease from $196.392 billion as of December 31, 2023, reflecting a decline of 1.9%[14]. - Total liabilities decreased to $178.256 billion as of September 30, 2024, from $182.626 billion as of December 31, 2023, indicating a reduction of 2%[14]. - Total assets decreased from $7,075 million on December 31, 2023, to $5,458 million on September 30, 2024, representing a decline of approximately 22.8%[17]. - Total liabilities increased from $1,513 million on December 31, 2023, to $1,720 million on September 30, 2024, marking an increase of approximately 13.7%[17]. - Total equity of Ally Financial increased to $14.725 billion as of September 30, 2024, compared to $13.766 billion as of December 31, 2023, reflecting an increase of 7%[14]. Credit Losses and Provisions - The provision for credit losses increased to $645 million for the three months ended September 30, 2024, compared to $508 million in the same period of 2023, representing a rise of 27%[10]. - The provision for credit losses rose to $1,609 million for the nine months ended September 30, 2024, compared to $1,381 million for the same period in 2023, indicating an increase of about 16.5%[25]. - The allowance for loan losses at September 30, 2024, was $3,700 million, reflecting a provision for credit losses of $1,609 million during the nine months ended September 30, 2024[82]. - The provision for credit losses for the three months ended September 30, 2024, was $645 million, indicating a proactive approach to managing credit risk[80]. Investments and Securities - The total available-for-sale securities amounted to $27.312 billion as of September 30, 2024, with unrealized losses of $3.430 billion[67]. - The fair value of total available-for-sale securities decreased from $28.416 billion at December 31, 2023, to $23.905 billion at September 30, 2024, a decline of 15.7%[67]. - The total gross reserves for insurance losses and loss adjustment expenses at September 30, 2024, were $197 million, compared to $145 million in 2023, marking a 36% increase[63]. - The net unrealized gain on equity securities for the three months ended September 30, 2024, was $58 million[73]. Dividends and Shareholder Returns - The company declared cash dividends of $0.30 per common share for the three months ended September 30, 2024, consistent with the same period in 2023[12]. - Common stock dividends paid remained stable at $280 million for the nine months ended September 30, 2024, compared to $277 million in the same period of 2023[27]. Regulatory and Capital Requirements - As of September 30, 2024, Ally's stress capital buffer requirement was 2.5%, which was updated to 2.6% in August 2024[198]. - Ally is subject to enhanced prudential standards and must maintain a minimum Common Equity Tier 1 risk-based capital ratio of 4.5%[198]. - Common Equity Tier 1 capital ratio for Ally Financial Inc. increased to 9.79% as of September 30, 2024, up from 9.36% on December 31, 2023[202]. - The total capital ratio for Ally Financial Inc. reached 12.90% as of September 30, 2024, compared to 12.41% at the end of 2023[202].

Core Viewpoint - Ally Financial Inc. reported third-quarter 2024 results that exceeded Zacks Consensus Estimates, with both top and bottom lines showing year-over-year growth [1] Financial Performance - Ally Financial's shares declined by 2% following the quarterly results announcement, attributed to a challenging operating environment characterized by high interest rates and inflationary pressures [2] - The company's stock fell 10.2% in the third quarter, contrasting with a 6.2% increase in the industry [3] Asset Quality - A significant concern was the deterioration in asset quality, with a provision for loan losses of $645 million, a 27% increase year over year [5] - Net charge-offs (NCOs) rose to $517 million or 1.50%, up from $456 million or 1.31% in the prior-year quarter, driven by an 18.8% increase in retail auto loan NCOs [5][6] Revenue Insights - Net financing revenues, the largest revenue source for Ally Financial, decreased by 2.9% to $1.49 billion due to lower average earning assets and higher funding costs [6] - Total other revenues surged by 41.4% year over year to $615 million, supported by growth in insurance and other revenue streams [9] Net Interest Margin (NIM) - The net interest margin contracted by 2 basis points to 3.22%, influenced by the asset-sensitive balance sheet [7] - NIM is projected to be around 3.20% for 2024, down from earlier guidance of approximately 3.30% [11] Strategic Initiatives - Ally Financial is diversifying into mortgage, wealth management, and online brokerage businesses, and launched Ally.ai, an AI platform to enhance operations [12] - The company sold its point-of-sale financing business, Ally Lending, in March 2024 to focus on core business growth [13] Future Outlook - The company anticipates increased loan losses in 2024, with retail auto NCO rates projected between 2.25% and 2.30% [14] - The Zacks Consensus Estimate for 2024 earnings indicates a 1.3% decline year over year, while 2025 earnings are expected to grow by 40.9% [15] Valuation Metrics - Ally Financial stock is currently trading at a 12-month trailing price-to-tangible book (P/TB) ratio of 0.88X, below the industry average of 1.29X [16] - Compared to peers, Ally's stock appears undervalued, with Capital One at 1.33X and SLM at 2.64X [17]

Group 1 - Ally Financial's shares have increased by 48% over the past year, indicating strong performance, but recent performance has declined due to rising credit cost concerns [1] - Q3 earnings results have not alleviated investor concerns regarding credit costs [1]

Core Viewpoint - Ally Financial Inc. is actively engaging with investors and stakeholders through presentations, highlighting its commitment to transparency and communication in the financial services sector [1]. Group 1: Company Overview - Ally Financial Inc. is recognized as the nation's largest all-digital bank and has a leading position in the auto financing industry [2]. - The company serves approximately 11 million customers, offering a comprehensive range of online banking services, including deposits, mortgage, and credit card products [2]. - Ally Financial also provides securities brokerage and investment advisory services, along with a robust corporate finance business that supports equity sponsors and middle-market companies [2]. Group 2: Upcoming Events - The Chief Financial Officer of Ally Financial, Russ Hutchinson, will present at the BancAnalysts Association of Boston Conference on November 7, 2024, at approximately 11:15 a.m. ET [1]. - A live webcast of the presentation will be available on the company's Investor Relations website, with a replay option following the event [1].

Core Insights - Ally Bank is recognized as a leading auto lender and operates a strong online banking platform for consumers [1] - The recent earnings report highlights positive financial performance, contributing to the stock's appeal [1] Financial Performance - Ally Bank's latest earnings indicate robust growth, which has led to increased investor interest [1] - The stock has been actively purchased by investors, reflecting confidence in its future prospects [1]

Group 1 - 3D Systems (DDD) is a leading provider of 3D content-to-print solutions, with a Zacks Consensus Estimate for current year earnings revised downward by 291.7% over the last 60 days [1] - 1-800-FLOWERS.COM (FLWS) is a leading e-commerce provider of floral products and gifts, with a Zacks Consensus Estimate for current year earnings revised downward by 51.4% over the last 60 days [1] - Ally Financial (ALLY) is a diversified financial services company, with a Zacks Consensus Estimate for current year earnings revised downward by almost 21.1% over the last 60 days [1]

Core Viewpoint - Ally Financial reported third-quarter 2024 adjusted earnings of 95 cents per share, exceeding the Zacks Consensus Estimate of 81 cents, reflecting a 14.5% increase from the previous year [1] Financial Performance - Total GAAP net revenues reached $2.1 billion, a 6.9% increase year-over-year, although it slightly missed the Zacks Consensus Estimate of $2.12 billion [3] - Net financing revenues decreased by 2.9% year-over-year to $1.49 billion, primarily due to higher funding costs and lower average earning assets [3] - Total other revenues surged by 41.4% year-over-year to $615 million, surpassing the projected $517.8 million [3] - Total non-interest expenses decreased marginally to $1.23 billion, reflecting effective expense management, compared to the estimate of $1.29 billion [3][4] Credit Quality and Loan Performance - Non-performing loans stood at $1.27 billion, down 15.6% year-over-year, better than the estimate of $1.32 billion [5] - Net charge-offs increased by 13.4% year-over-year to $517 million, aligning closely with the projected figure [5] - The provision for loan losses rose by 27% year-over-year to $645 million, exceeding the estimate of $589.2 million [5] Capital Ratios - As of September 30, 2024, the total capital ratio improved to 12.9%, up from 12.5% in the prior year, while the tier 1 capital ratio increased to 11.2% from 10.7% [7] Share Repurchase Activity - The company did not engage in any share repurchases during the reported quarter [8] Market Outlook - The company faces challenges due to deteriorating credit quality and rising operating expenses, but efforts to diversify revenue streams may support profitability [9]

Group 1 - The CEO of Ally Financial, Michael Rhodes, indicated that the company's upcoming quarters will be "choppy" due to market conditions [1] - Ally has implemented stricter borrower standards, focusing on risk-adjusted returns rather than origination volume, leading to improved borrower credit quality since early 2023 [1] - The pre-tax income in the auto segment for Ally was reported at $175 million, a decrease of $202 million year-over-year, primarily due to higher retail net charge-offs and loss reserves [1] Group 2 - CFO Russell Hutchinson highlighted the unique challenges faced by the bank, including higher prices for used vehicles and elevated loss content, particularly from the 2022 vintage [2] - The bank is experiencing increased delinquencies and charge-offs, attributed to borrowers struggling with high inflation, cost of living, and a weakening employment situation [3] - Credit bureau data indicates that the trends observed by Ally are consistent with industry patterns, providing some confidence in their assessment of borrower conditions [3]

Financial Data and Key Metrics Changes - Adjusted EPS for Q3 2024 was $0.95, influenced by significant tax credits related to EV lease volumes, while core pre-tax income was $108 million, indicating room for improvement [5][15] - Net financing revenue excluding OID was $1.5 billion, lower year-over-year due to reduced average earning assets and higher cost of funds [13] - Net interest margin (NIM) excluding OID decreased to 3.25%, down 5 basis points from the prior quarter [15] Business Line Data and Key Metrics Changes - In the Auto segment, pre-tax income was $175 million, down from the prior year due to higher funding costs and provision expenses [31] - Insurance written premiums reached a record $384 million, driven by new OEM relationships and higher inventory exposure [36] - Corporate finance core pre-tax income was $94 million, with end-of-period HFI loans increasing to $10.3 billion, up $600 million quarter-over-quarter [38] Market Data and Key Metrics Changes - Retail deposits at Ally Bank totaled $141 billion, with a decline of $600 million in the quarter, aligning with expectations as loan balances also decreased [10] - The credit card portfolio showed improved performance, with net charge-offs down to 9.9% from 12.6% in the prior quarter [23] Company Strategy and Development Direction - The company is focused on margin expansion and revenue growth, with a strong emphasis on capital and expense discipline [8][42] - Ally aims to achieve a medium-term NIM target of 4%, supported by a liability-sensitive balance sheet and a favorable asset mix shift [16][40] - The company is diversifying revenue streams, particularly in insurance and auto finance, with expectations of generating $1.5 billion in written premiums this year [44] Management's Comments on Operating Environment and Future Outlook - Management acknowledged challenges in the near term due to volatility in interest rates and consumer strain from inflation, but expressed confidence in the company's ability to deliver compelling returns over time [4][46] - The outlook for credit costs remains elevated, but management is optimistic about the normalization of losses as underwriting changes take effect [45][61] Other Important Information - CET1 ratio increased to 9.8%, with over $4 billion of excess capital above the required minimum [21] - The company is evaluating a potential change in accounting treatment for EV lease tax credits, which could impact CET1 by approximately 20 basis points [35] Q&A Session Summary Question: Expectations for retail auto loss rates - Management anticipates that the increase in loss rates for Q4 will primarily be seasonal, with confidence in eventual normalization due to underwriting changes [49][50] Question: Timing for NIM inflection - Management reiterated that while there are near-term pressures, the medium-term outlook remains unchanged, targeting a 4% NIM [53][54] Question: Confidence in revised charge-off guidance - Management explained that the revision to charge-off guidance reflects broader industry trends and acknowledged the need for caution in timing expectations [56][61] Question: Performance of new underwriting cohorts - Management confirmed that the cohorts are performing better than expected, but acknowledged some underperformance in delinquency rates [66][68] Question: Long-term targets and their feasibility - Management believes that achieving mid-teens returns is feasible, contingent on credit normalization, margin expansion, and effective expense management [72][76]

Core Insights - Ally Financial reported $2.1 billion in revenue for Q3 2024, a year-over-year increase of 6.9% and an EPS of $0.95 compared to $0.83 a year ago, exceeding Zacks Consensus Estimates for both revenue and EPS [1] - The company demonstrated a revenue surprise of +2.01% and an EPS surprise of +66.67% compared to analyst expectations [1] Financial Performance Metrics - Net interest margin was reported at 3.2%, slightly below the estimated 3.3% [2] - Efficiency Ratio stood at 58.3%, better than the average estimate of 58.6% [2] - Book value per share was $40.70, exceeding the estimate of $38.93 [2] - Net charge-offs to average finance receivables and loans outstanding were 1.5%, better than the estimated 1.6% [2] - Gain on mortgage and automotive loans was $6 million, surpassing the estimate of $5.71 million, reflecting a +50% change year-over-year [2] - Net financing revenue was $1.49 billion, slightly below the average estimate of $1.51 billion, representing a -2.9% year-over-year change [2] - Total other revenue reached $615 million, exceeding the estimate of $552.07 million, with a +41.4% year-over-year change [2] - Insurance premiums and service revenue earned were $359 million, above the estimate of $344.37 million, showing a +12.2% change year-over-year [2] - Total financing revenue and other interest income was $3.57 billion, below the average estimate of $3.62 billion, indicating a -0.6% year-over-year change [2] - Other (loss) / gain on investments, net was $74 million, significantly higher than the estimate of $37.55 million, with a year-over-year change of -280.5% [2] - Other income, net of losses was $176 million, exceeding the estimate of $158.44 million, reflecting a +15.8% year-over-year change [2] - Interest on loans held-for-sale was $5 million, below the estimate of $7.19 million, representing a -28.6% change year-over-year [2] Stock Performance - Shares of Ally Financial returned +2.5% over the past month, underperforming the Zacks S&P 500 composite's +3.8% change [3] - The stock currently holds a Zacks Rank 4 (Sell), indicating potential underperformance in the near term [3]