Question-and-Answer SessionWe just threw up the first ARS question that we've been asking for all our companies. And Russ, while the audience is responding, maybe start with a big picture. Obviously, a busy first half of the year for Ally. And just as you sit here today, some of the actions you've taken to improve the financial results, kind of how you're feeling about the world?Russell HutchinsonChief Financial Officer Yes. No, it's a great question. We feel really good about the world. I mean, we've taken ...

Ally Financial (NYSE:ALLY) FY Conference September 09, 2025 09:00 AM ET Company ParticipantsJason Goldberg - Managing DirectorRussell Hutchinson - CFOJason GoldbergGreat. Next up, very pleased to have Ally Financial with us. From the company, Russell Hutchinson, Chief Financial Officer. Russ, thanks for being back.Russell HutchinsonGreat, thanks for having me.Jason GoldbergWe just put up the first ARS question that we've been asking for all our companies. Russ, a lot of the audience is responding. Maybe sta ...

Core Insights - Ally Financial Inc. (ALLY) shares reached a new 52-week high of $42.46, with an 11.1% increase over the past month, outperforming the industry and major indices [1][10] - The company has been focusing on organic and inorganic growth to enhance revenues, with net financing revenues showing a CAGR of 5.4% over the last five years [4][5] - Despite a projected decline in 2024, net revenues are expected to rebound with a 13.7% growth in 2026, supported by solid origination volumes and restructuring efforts [7][26] Revenue and Growth - Ally Financial's net financing revenues and finance receivables have been a focus area, with the latter declining due to the divestiture of the credit card business [5][6] - The company has streamlined operations by divesting non-core businesses, which is expected to stabilize other revenues in 2025 [6][10] - The Zacks Consensus Estimate for sales indicates a decline of 3.3% this year, but a recovery is anticipated in 2026 [7][11] Financial Position - As of June 30, 2025, Ally Financial had total debt of $19.7 billion and cash equivalents of $10.6 billion, indicating a solid liquidity position [12] - The company has maintained a strong dividend policy, with a 20% hike announced in January 2022 and an annualized growth of 10.4% over the last five years [13][14] - Ally's forward P/E ratio of 8.6X suggests that its shares are undervalued compared to the industry average of 10.57X [15][18] Asset Quality and Risks - Deteriorating asset quality is a concern, with rising provisions for credit losses and net charge-offs expected due to high interest rates and inflationary pressures [19][20] - Management anticipates retail auto net charge-off rates to be between 2.00% and 2.15%, indicating potential credit cost increases [21] - The net interest margin (NIM) is projected to be negatively impacted by the current interest rate environment, with a decline noted from 3.32% in 2023 to 3.27% in 2024 [21][22] Analyst Sentiment - The Zacks Consensus Estimate for 2025 earnings has seen a slight upward revision, while the estimate for 2026 has decreased marginally [23][25] - Projected earnings for 2025 and 2026 indicate significant year-over-year growth of 52.8% and 49.5%, respectively [25][26] Conclusion - Ally Financial's rise in net financing revenues and solid liquidity position are expected to support its financial performance, despite challenges related to asset quality and interest rates [26][27] - The stock is viewed as a cautious investment, with a Zacks Rank of 3 (Hold) indicating a neutral outlook for investors [27]

Company Overview - Ally Financial Inc. (ALLY) is experiencing significant attention from investors due to high implied volatility in the options market, particularly the Sept 19, 2025 $21.00 Put option [1] Implied Volatility Insights - Implied volatility indicates the market's expectation of future price movement, suggesting that investors anticipate a significant price change for Ally Financial [2] - High implied volatility may signal an upcoming event that could lead to a substantial rally or sell-off [2] Analyst Sentiment - Ally Financial holds a Zacks Rank 3 (Hold) in the Financial - Consumer Loans industry, which is in the top 40% of the Zacks Industry Rank [3] - Over the past 60 days, four analysts have raised their earnings estimates for the current quarter, while four have lowered theirs, resulting in a consensus estimate decrease from $1.01 to $0.99 per share [3] Trading Strategy Implications - The high implied volatility could indicate a developing trading opportunity, as options traders often seek to sell premium on options with elevated implied volatility [4] - This strategy aims to benefit from the decay of options value, with the expectation that the underlying stock will not move as much as anticipated by the market [4]

Core Points - Krystal Roberts has been awarded the 2025 Ally Sees Her Award for her significant achievements as a woman of color in the automotive retail industry [1][2] - Roberts has been with Advantage Auto Group for over 22 years and has served as Executive Manager for eight years, leading Advantage Chevrolet to become one of the top dealerships in the Chicago and Northwest Indiana area [3][4] - Under her leadership, Advantage Chevrolet's sales have increased by 20%, selling approximately 2,200 new and used vehicles annually [4] - Roberts has implemented employee benefits such as extended lunch breaks and paid health club memberships, increasing female representation in the workforce to 25% over the past five years [5] - Ally Financial is donating $10,000 to the United Negro College Fund (UNCF) Chicago in celebration of Roberts' leadership and community involvement [7] - Roberts holds an MBA from DePaul University and is the first female chair of the General Motors Commercial Dealer Advisory Board [8] Company Overview - Ally Financial Inc. is a financial services company known for its all-digital bank and industry-leading auto financing business, focusing on customer and community support [9]

Group 1 - Ally Financial Inc. will have its Chief Financial Officer Russ Hutchinson present at the Barclays Global Financial Services Conference on September 9, 2025, at approximately 9:00 a.m. ET [1] - A live webcast of the conference will be available on Ally's Investor Relations website, with a replay also accessible afterward [1] Group 2 - Ally Financial Inc. is recognized as the nation's largest all-digital bank and has a leading position in the auto financing sector [2] - The company offers a range of financial services, including deposits, securities brokerage, investment advisory services, auto financing, and insurance [2] - Ally also has a corporate finance division that provides capital for equity sponsors and middle-market companies [2]

Core Insights - Ally Bank has received an "Outstanding" rating on its Community Reinvestment Act (CRA) performance evaluation by the Federal Reserve Board, marking its fourth consecutive highest rating since 2017, placing it among the top 15% of U.S. financial institutions evaluated under the CRA [1][2][3] Community Investment Highlights - During the 2023-2024 exam period, Ally Bank delivered $2.68 billion in community development loans and investments, which included: - $1.7 billion in community development investments, with $1.47 billion specifically supporting affordable housing - $734.4 million in community development loans, including $138 million for economic development and community services - $3.4 million in grants to non-profit organizations focused on community development and economic mobility - 1,685 employee volunteer hours dedicated to financial literacy initiatives and nonprofit partnerships [2][5] Specific Projects and Initiatives - Ally Bank provided a $35 million loan to Lendistry, which supported over 1,300 startups in 2023 - An $11.7 million real estate construction loan was issued to Ogden PSH, LLC for a Low-Income Housing Tax Credit rental project aimed at chronically homeless individuals, with units reserved for homeless veterans and people with disabilities - A $5 million investment was made into ResilienceVC, an early-stage venture fund targeting scalable financial technology startups that enhance financial resilience for users [5]

Core Viewpoint - Ally Financial Inc. has committed over $150 million in 2025 to support workforce development aimed at enhancing economic mobility through education, career opportunities, and job creation [1][2] Group 1: Financial Commitment and Impact - The company’s Community Reinvestment Act (CRA) efforts in 2025 will generate more than $147 million in loans and investments focused on workforce development, including job creation and retention [2] - Ally Charitable Foundation has awarded over $1.6 million in grants to 57 nonprofit organizations in Charlotte and Detroit, with nearly $1 million allocated to Detroit-based organizations and $700,000 to Charlotte-based organizations [3] - Total grantmaking by the Ally Charitable Foundation in 2025 is nearly $3 million, supporting 113 nonprofits across Charlotte and Detroit [3] Group 2: Community Engagement and Support - There has been a 113% increase in grant requests since 2022, indicating a significant need for community support [4] - Ally's initiatives include partnerships with local organizations to provide educational and professional development opportunities, such as the "Saturdays in the D" program in Detroit [4] - In Charlotte, Ally participates in the Tech Rising collaborative, which aims to bridge the digital divide and supports local nonprofits through grants [5] Group 3: Workforce Development Programs - Ally invests in programs that support the next generation of workers, including the University Growth Fund and the Small Business Investing Scholars Program [6][7] - The company emphasizes not only job creation but also the quality of jobs, focusing on low- to moderate-income individuals and communities [7] - Ally has a long-standing relationship with The Other Side Academy, providing nearly $1.5 million in grants to support workforce preparedness for formerly incarcerated individuals [8]

Part I — Financial Information [Financial Statements](index=5&type=section&id=Item%201.%20Financial%20Statements) Ally Financial's Q2 2025 net income rose to $352 million, while six-month net income fell to $127 million due to a $495 million pre-tax loss on securities and a $305 million goodwill impairment Condensed Consolidated Statement of Comprehensive Income | ($ in millions) | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | **Total net revenue** | **$2,082** | **$2,022** | **$3,623** | **$4,020** | | Provision for credit losses | $384 | $457 | $575 | $964 | | Total noninterest expense | $1,262 | $1,286 | $2,896 | $2,594 | | **Net income** | **$352** | **$219** | **$127** | **$362** | | **Diluted earnings per common share** | **$1.04** | **$0.62** | **$0.23** | **$0.99** | Condensed Consolidated Balance Sheet Highlights | ($ in millions) | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total cash and cash equivalents | $10,592 | $10,292 | | Finance receivables and loans, net | $129,813 | $132,316 | | **Total assets** | **$189,473** | **$191,836** | | Total deposit liabilities | $147,866 | $151,574 | | Total long-term debt | $15,876 | $17,495 | | **Total liabilities** | **$174,926** | **$177,933** | | **Total equity** | **$14,547** | **$13,903** | Condensed Consolidated Statement of Cash Flows Highlights | Six months ended June 30, ($ in millions) | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $1,887 | $2,720 | | Net cash provided by investing activities | $1,568 | $2,590 | | Net cash used in financing activities | ($3,337) | ($4,620) | | **Net increase in cash and cash equivalents** | **$128** | **$685** | - On April 1, 2025, the company completed the sale of its credit card operations, Ally Credit Card, resulting in a goodwill impairment charge of **$305 million** and a net pretax loss of **$8 million** during the first six months of 2025[38](index=38&type=chunk)[40](index=40&type=chunk) - In the first quarter of 2025, Ally executed a balance sheet repositioning by selling lower-yielding available-for-sale securities with an amortized cost of approximately **$4.6 billion** for proceeds of **$4.1 billion**, resulting in a pre-tax loss of **$495 million**[66](index=66&type=chunk)[74](index=74&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=69&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes Q2 2025 net income growth to lower credit provisions and investment gains, while six-month decline was due to securities sale losses and goodwill impairment, with strong auto originations and robust capital ratios [Consolidated Results of Operations](index=76&type=section&id=Consolidated%20Results%20of%20Operations) Q2 2025 net income increased to $352 million due to lower credit provisions and investment gains, while six-month net income decreased to $127 million due to a $460 million investment loss and $305 million goodwill impairment - The increase in net income for Q2 2025 was primarily driven by lower provision for credit losses, a gain on investments (versus a loss in Q2 2024), and lower total noninterest expense[387](index=387&type=chunk) - The decrease in net income for the first six months of 2025 was mainly due to a significant loss on investments from the AFS portfolio repositioning and a goodwill impairment charge related to the sale of Ally Credit Card[387](index=387&type=chunk)[392](index=392&type=chunk)[395](index=395&type=chunk) - Provision for credit losses decreased by **$389 million** for the six months ended June 30, 2025, primarily driven by a provision benefit associated with the sale of Ally Credit Card and lower net charge-offs in the consumer automotive portfolio[394](index=394&type=chunk) [Segment Analysis](index=79&type=section&id=Segment%20Analysis) Q2 2025 saw Automotive Finance pre-tax income decline to $472 million, Insurance swing to a $28 million profit, Corporate Finance decrease to $96 million, and Corporate and Other reduce its loss to $160 million Pre-tax Income by Segment (Three Months Ended June 30) | ($ in millions) | 2025 | 2024 | | :--- | :--- | :--- | | Automotive Finance | $472 | $584 | | Insurance | $28 | ($40) | | Corporate Finance | $96 | $109 | | Corporate and Other | ($160) | ($374) | | **Total** | **$436** | **$279** | - Automotive Finance consumer loan originations increased to **$11.0 billion** in Q2 2025 from **$9.8 billion** in Q2 2024, driven by strong new vehicle sales and momentum in electric vehicle leases[424](index=424&type=chunk)[428](index=428&type=chunk) - Insurance operations' combined ratio improved slightly to **117.1%** in Q2 2025 from **117.6%** in Q2 2024, as higher earned premiums were partially offset by increased weather-related losses, which rose to **$91 million** from **$78 million**[441](index=441&type=chunk)[447](index=447&type=chunk)[448](index=448&type=chunk) [Risk Management](index=96&type=section&id=Risk%20Management) Ally's risk management shows total loan exposure of $144.3 billion, with nonperforming loans at 1.2% and allowance for loan losses at $3.4 billion, while operating lease remarketing gains significantly deteriorated - Total consumer nonperforming loans decreased to **$1.2 billion** (**1.2%** of portfolio) at June 30, 2025, from **$1.4 billion** (**1.3%** of portfolio) at year-end 2024[516](index=516&type=chunk)[521](index=521&type=chunk) Consumer Net Charge-off Ratios (Annualized) | Three months ended June 30, | 2025 | 2024 | | :--- | :--- | :--- | | Consumer automotive | 1.7% | 1.8% | | Consumer other (Credit Card) | — | 12.6% | | **Total consumer** | **1.5%** | **1.7%** | - The allowance for loan losses was **$3.4 billion** at June 30, 2025, representing **2.6%** of total finance receivables, with the forecast assuming a peak unemployment rate of approximately **4.7%** in Q4 2025[556](index=556&type=chunk)[558](index=558&type=chunk) - Operating lease remarketing performance deteriorated significantly, with the average gain per terminated vehicle falling to **$14** in Q2 2025 from **$1,420** in Q2 2024, primarily due to lower auction prices for specific models[599](index=599&type=chunk)[600](index=600&type=chunk) [Liquidity Management, Funding, and Regulatory Capital](index=111&type=section&id=Liquidity%20Management%2C%20Funding%2C%20and%20Regulatory%20Capital) Ally maintains strong liquidity of $66.8 billion and robust capital ratios, with CET1 at 9.89%, despite a $3.7 billion decrease in total deposits to $147.9 billion Total Available Liquidity | ($ in millions) | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Liquid cash and equivalents | $10,032 | $9,561 | | FHLB unused pledged borrowing capacity | $10,700 | $12,211 | | Unencumbered highly liquid securities | $19,167 | $19,950 | | FRB Discount Window pledged capacity | $26,896 | $26,734 | | **Total available liquidity** | **$66,795** | **$68,456** | - Total deposits decreased by **$3.7 billion** during the first six months of 2025 to **$147.9 billion**, driven by a **$3.5 billion** reduction in brokered deposits and a **$272 million** decrease in retail deposits[628](index=628&type=chunk) Regulatory Capital Ratios (Ally Financial Inc.) | Ratio | June 30, 2025 | Required Minimum (incl. buffer) | | :--- | :--- | :--- | | Common Equity Tier 1 (CET1) | 9.89% | 7.10% (4.5% + 2.6% SCB) | | Tier 1 Capital | 11.38% | 8.60% | | Total Capital | 13.25% | 10.60% | | Tier 1 Leverage | 9.06% | 4.00% | - The company's stress capital buffer (SCB) requirement was updated to **2.6%**, effective October 2024, and is scheduled to remain at **2.6%** effective October 1, 2025[653](index=653&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=120&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section refers to the Market Risk discussion within Item 2 for quantitative and qualitative disclosures about market risk - The report directs readers to the Market Risk section within the MD&A for all quantitative and qualitative disclosures regarding market risk[693](index=693&type=chunk) [Controls and Procedures](index=121&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal control over financial reporting during the quarter - The Principal Executive Officer and Principal Financial Officer concluded that the company's disclosure controls and procedures were effective as of the end of the period covered by the report[695](index=695&type=chunk) - No changes occurred during the quarter ended June 30, 2025, that have materially affected, or were reasonably likely to materially affect, the company's internal control over financial reporting[696](index=696&type=chunk) Part II — Other Information [Legal Proceedings](index=122&type=section&id=Item%201.%20Legal%20Proceedings) The company refers to Note 24 for legal proceedings, with management not expecting material impact on financial condition, though potential materiality to results of operations for a particular period - For information on legal proceedings, the report refers to Note 24 of the financial statements[698](index=698&type=chunk) - Management does not currently believe that the ultimate outcomes of pending legal matters will be material to the company's consolidated financial condition, after accounting for existing accruals[352](index=352&type=chunk) [Risk Factors](index=122&type=section&id=Item%201A.%20Risk%20Factors) No material changes to the risk factors previously described in the company's 2024 Annual Report on Form 10-K - The company states that there have been no material changes to the risk factors previously disclosed in its 2024 Annual Report on Form 10-K[699](index=699&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=122&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) Ally had no unregistered equity sales in Q2 2025, repurchasing 27,000 shares for approximately $1 million, primarily for tax withholding on share-based incentive plans Issuer Purchases of Equity Securities (Q2 2025) | Month | Total Shares Repurchased (in thousands) | Weighted-Average Price Paid per Share | | :--- | :--- | :--- | | April 2025 | 17 | $30.09 | | May 2025 | 6 | $35.75 | | June 2025 | 4 | $35.97 | | **Total** | **27** | **$32.20** | - All repurchased shares consisted of common stock withheld to cover income taxes owed by participants in the company's share-based incentive plans[702](index=702&type=chunk)

Core Insights - Financial pressures are significantly affecting social connections among Gen Z and millennials, with 44% reporting they have skipped major social events due to costs [1][5] - A majority of young adults (69%) still prioritize in-person connections with friends at least weekly, despite acknowledging that social spending impacts their financial goals [2][5] Financial Impact on Social Life - 59% of Gen Z and millennials state that their financial goals are negatively impacted by spending on social activities [5] - On average, individuals spend $250 monthly on activities with friends, leading to a median total cost of $750 over six months [5] - 42% of respondents overspend on their social budgets several months each year, with nearly a quarter feeling left out due to financial constraints [5][9] Gender Differences in Financial Strain - Women report feeling the financial strain of social spending more intensely than men, with 30% of women indicating that social budgeting complicates savings compared to 22% of men [9] - 27% of women state that social spending hinders their ability to save for emergencies, while 25% find it challenging to pay off credit card bills each month [9] Emotional and Social Consequences - Financial differences among friends can lead to anxiety and conflict, with 24% of young adults feeling anxious about these disparities [9] - 20% of respondents attribute financial or lifestyle differences to the breakdown of friendships, highlighting the emotional weight of financial discussions [9] Solutions and Recommendations - Ally Bank suggests using tools like savings or spending buckets to create a "friendship fund," allowing for better financial planning while maintaining social connections [3][4] - Open discussions about finances among friends can help alleviate the stigma around financial struggles and promote mutual support [4]