Ally(ALLY) - 2025 Q3 - Quarterly Results

Executive Summary & Highlights Ally Financial reported strong Q3 2025 financial results, with significant increases in EPS and pre-tax income, driven by record consumer auto originations and continued retail deposit growth, reflecting improved returns and disciplined execution Financial Highlights Ally Financial reported strong third-quarter 2025 financial results, with significant year-over-year increases in GAAP and Adjusted EPS, and pre-tax income, reflecting improved returns and disciplined execution across its core businesses | Metric | 3Q 25 | YoY Change | QoQ Change | | :--------------------------------------- | :------ | :--------- | :--------- | | GAAP EPS | $1.18 | +116% | +14% | | Adjusted EPS | $1.15 | +166% | +16% | | GAAP Pre-tax income | $513 million | +$248 million | +$77 million | | Core Pre-tax income | $502 million | +$282 million | +$85 million | | GAAP Net Income Attributable to Common Shareholders | $371 million | +117% | +15% | | Core Net Income Attributable to Common Shareholders | $363 million | +167% | +17% | | Return on GAAP Shareholder's Equity | 11.9% | +104% | +10% | | Core ROTCE | 15.3% | +145% | +12% | | GAAP Total Net Revenue | $2,168 million | +2% | +4% | | Adjusted Total Net Revenue | $2,157 million | +3% | +5% | - Net Interest Margin (NIM) ex. OID increased by 10 basis points quarter-over-quarter to 3.55%[10] - Common equity tier 1 ratio improved to 10.1%, up approximately 20 basis points quarter-over-quarter[10] Operational Highlights Ally's operational performance was strong, marked by record consumer auto applications, significant auto originations, stable insurance premiums, and continued growth in retail deposits, reinforcing its position as a leading digital bank - Consumer auto originations reached $11.7 billion from a record 4.0 million applications, up 25% year-over-year[5][10] - Retail auto originated yield was 9.72%, with 42% of volume in the highest credit quality tier[10] - Retail auto net charge-offs decreased by 36 basis points year-over-year to 1.88%[10] - Insurance written premiums were $385 million, flat year-over-year, and up 2% excluding excess of loss reinsurance[10] - Retail deposits totaled $142 billion, with 92% FDIC insured and 88% core deposit funded[7][10] - Ally Bank achieved its 66th consecutive quarter of retail deposit customer growth, serving 3.4 million customers[7][10] - Corporate Finance delivered a 30% ROE for the quarter, with criticized assets and non-accrual loans near historic lows[6][10] CEO Comments CEO Michael Rhodes highlighted the quarter's results as proof of continued progress towards improved returns, attributing success to sharper strategic alignment and disciplined execution across all core businesses, including Dealer Financial Services, Insurance, Corporate Finance, and Ally Bank - CEO Michael Rhodes stated that the quarter's results demonstrate continued progress toward improved returns, driven by sharper strategic alignment and disciplined execution[4][8] - Dealer Financial Services showed competitive strength with record consumer applications and $11.7 billion in originations, up 25% year-over-year[5] - Corporate Finance achieved a 30% ROE, maintaining low criticized assets and non-accrual loans due to disciplined risk management[6] - Ally Bank grew its deposit customer base for the 66th consecutive quarter, reaching 3.4 million customers and $142 billion in retail deposits, solidifying its position as the largest all-digital bank[7] Key Financial Metrics The company reported significant year-over-year growth in key financial metrics for Q3 2025, including substantial increases in GAAP and Adjusted Net Income and EPS, alongside improvements in profitability ratios like Return on GAAP Shareholder's Equity and Core ROTCE | ($ millions except per share data) | 3Q 25 | 2Q 25 | 3Q 24 | Increase / (Decrease) vs. 2Q 25 | Increase / (Decrease) vs. 3Q 24 | | :----------------------------------------- | :------ | :------ | :------ | :------------------------------ | :------------------------------ | | GAAP Net Income (Loss) Attributable to Common Shareholders | $371 | $324 | $171 | 15% | 117% | | Core Net Income Attributable to Common Shareholders | $363 | $309 | $136 | 17% | 167% | | GAAP Earnings per Common Share | $1.18 | $1.04 | $0.55 | 14% | 116% | | Adjusted EPS | $1.15 | $0.99 | $0.43 | 16% | 166% | | Return on GAAP Shareholder's Equity | 11.9% | 10.7% | 5.8% | 10% | 104% | | Core ROTCE | 15.3% | 13.6% | 6.2% | 12% | 145% | | GAAP Common Shareholder's Equity per Share | $41.56 | $39.71 | $39.68 | 5% | 5% | | Adjusted Tangible Book Value per Share | $39.19 | $37.30 | $35.41 | 5% | 11% | | GAAP Total Net Revenue | $2,168 | $2,082 | $2,135 | 4% | 2% | | Adjusted Total Net Revenue | $2,157 | $2,064 | $2,090 | 5% | 3% | Third Quarter 2025 Financial Results Discussion Ally Financial's Q3 2025 results showed significant net income growth driven by higher net financing revenue and reduced credit loss provisions, with varied pre-tax income performance across segments Consolidated Financial Performance Ally Financial's consolidated performance in Q3 2025 showed a significant increase in net income attributable to common shareholders, driven by higher net financing revenue and a substantial decrease in provision for credit losses, despite a slight increase in noninterest expense - Net income attributable to common shareholders was $371 million, a significant increase from $171 million in Q3 2024[13][18] - Net financing revenue rose to $1.6 billion, up $64 million year-over-year, with Net Interest Margin (NIM) at 3.51% and NIM excluding core OID at 3.55%, both up over 20 bps year-over-year[13][18] - Other revenue decreased by $31 million year-over-year to $584 million, primarily due to a smaller increase in fair value of equity securities compared to the prior year, partially offset by growth in diversified revenue streams[14][18] - Provision for credit losses decreased by $230 million year-over-year to $415 million, attributed to an increase in retail auto reserve rate in the prior year, lower retail auto net charge-offs, and the sale of the credit card portfolio[15][18] - Noninterest expense increased by $15 million year-over-year to $1,240 million[16][18] | ($ millions except per share data) | 3Q 25 | 2Q 25 | 3Q 24 | Increase/(Decrease) vs. 2Q 25 | Increase/(Decrease) vs. 3Q 24 | | :----------------------------------------- | :------ | :------ | :------ | :------------------------------ | :------------------------------ | | Net Financing Revenue | $1,584 | $1,516 | $1,520 | $68 | $64 | | Other Revenue | $584 | $566 | $615 | $18 | $(31) | | Provision for Credit Losses | $415 | $384 | $645 | $31 | $(230) | | Noninterest Expense | $1,240 | $1,262 | $1,225 | $(22) | $15 | | Pre-Tax Income (loss) | $513 | $436 | $265 | $77 | $248 | | Net Income (Loss) Attributable to Common Shareholders | $371 | $324 | $171 | $47 | $200 | | GAAP EPS | $1.18 | $1.04 | $0.55 | $0.14 | $0.63 | | Adjusted EPS | $1.15 | $0.99 | $0.43 | $0.16 | $0.72 | Pre-Tax Income by Segment Dealer Financial Services maintained stable pre-tax income quarter-over-quarter and saw a significant year-over-year increase, while Automotive Finance's pre-tax income improved year-over-year. Insurance and Corporate Finance experienced slight year-over-year declines in pre-tax income | ($ millions) | 3Q 25 | 2Q 25 | 3Q 24 | Increase/(Decrease) vs. 2Q 25 | Increase/(Decrease) vs. 3Q 24 | | :--------------------------------------- | :------ | :------ | :------ | :------------------------------ | :------------------------------ | | Automotive Finance | $421 | $472 | $355 | $(51) | $66 | | Insurance | $79 | $28 | $102 | $51 | $(23) | | Dealer Financial Services | $500 | $500 | $457 | $— | $43 | | Corporate Finance | $95 | $96 | $105 | $(1) | $(10) | | Corporate and Other | $(82) | $(160) | $(297) | $78 | $215 | | Pre-Tax Income (Loss) from Continuing Operations | $513 | $436 | $265 | $77 | $248 | | Core Pre-Tax Income | $502 | $418 | $220 | $85 | $282 | Segment Results Discussion The Auto Finance segment saw increased pre-tax income and improved credit quality, while Insurance experienced a decline due to fair value changes, and Corporate Finance maintained strong profitability despite a slight pre-tax income decrease Auto Finance The Auto Finance segment saw a year-over-year increase in pre-tax income, primarily due to lower provision expense, despite a decrease in net financing revenue. Credit quality improved, with lower net charge-offs and delinquencies, while consumer auto earning assets grew - Pre-tax income was $421 million, up $66 million year-over-year, driven by lower provision expense[24] - Net financing revenue was $1.3 billion, down $54 million year-over-year, primarily due to lower lease gains and commercial assets[24] - Retail auto portfolio yield, excluding hedges, increased 22 bps year-over-year to 9.21%[24] - Provision for credit losses decreased $169 million year-over-year to $410 million, reflecting improved credit and a prior year reserve rate increase[25] - Retail auto net charge-off rate decreased 36 bps year-over-year to 1.88%, and 30+ days past due delinquencies decreased 30 bps year-over-year to 4.90%[25] - Consumer auto originations totaled $11.7 billion, with 60% from used retail volume[26] - End-of-period consumer auto earning assets increased $2.2 billion year-over-year to $93.6 billion, while commercial earning assets decreased $2.1 billion to $21.8 billion[27] Insurance The Insurance segment's pre-tax income declined year-over-year due to a decrease in the fair value of equity securities, despite an increase in core pre-tax income driven by higher investment income and stable written premiums - Pre-tax income was $79 million, down $23 million year-over-year, primarily due to a $29 million decrease in the change in fair value of equity securities[28] - Core pre-tax income increased $6 million year-over-year to $52 million, driven by higher investment income[28] - Insurance losses increased $6 million year-over-year to $141 million, reflecting increased Property & Casualty (P&C) exposure[29] - Written premiums were $385 million, flat year-over-year, and up 2% excluding excess of loss reinsurance[30] - Total investment income, excluding fair value changes of equity securities, was $62 million, up $13 million year-over-year due to higher realized investment gains[30] Corporate Finance Corporate Finance reported a slight year-over-year decrease in pre-tax income, mainly due to lower other revenue, but maintained strong profitability with a 30% ROE and continued low levels of criticized assets and non-accrual loans - Pre-tax income was $95 million, down $10 million year-over-year, driven by lower other revenue[32] - Net financing revenue increased $2 million year-over-year to $111 million, due to higher earning assets[32] - Other revenue decreased $12 million year-over-year to $25 million, impacted by higher syndication and fee income in the prior year[32] - Provision expense was $8 million, a $3 million favorable change year-over-year, primarily due to lower specific reserve activity[33] - Return on equity (ROE) for the quarter was 30%[34] - The held-for-investment loan portfolio stood at $11.3 billion, 100% first lien, with criticized assets at 9% and non-accrual loans at 1%, both near historically low levels[34] Capital, Liquidity & Deposits Ally maintained a strong capital position with an increased CET1 ratio and robust liquidity, supported by substantial cash and deposits, while continuing to grow its retail deposit customer base Capital Ally maintained a stable common dividend and strengthened its capital position, with the CET1 ratio increasing and a successful credit risk transfer generating additional capital - Ally paid a $0.30 per share quarterly common dividend, unchanged year-over-year, and approved the same for Q4 2025[36] - The common equity tier 1 (CET1) capital ratio was 10.1%, with risk-weighted assets (RWA) at $150.7 billion, down $0.6 billion quarter-over-quarter[37] - A $5 billion credit risk transfer was closed at the tightest spread in program history, generating approximately 20 bps of CET1 at issuance[37] Liquidity & Funding Ally maintained robust liquidity with substantial cash and highly liquid securities, complemented by significant unused borrowing capacity, ensuring strong funding stability with deposits comprising a large portion of its funding portfolio - Cash and cash equivalents totaled $9.5 billion, with highly liquid securities at $19.9 billion[38] - Unused pledged borrowing capacity at FHLB and FRB was $10.3 billion and $26.9 billion, respectively[38] - Total current available liquidity was $66.6 billion, representing 5.8x uninsured deposit balances[38] - Deposits constituted 88% of Ally's funding portfolio[39] Deposits Ally's retail deposits remained strong, showing year-over-year growth and continued customer acquisition, particularly among younger demographics, while the average retail deposit portfolio yield saw a decrease - Retail deposits were $141.8 billion, up $0.4 billion year-over-year, but down $1.3 billion quarter-over-quarter[40] - Total deposits reached $148.4 billion, with Ally maintaining an industry-leading customer retention rate[40] - The average retail deposit portfolio yield was 3.48%, down 70 bps year-over-year and 10 bps quarter-over-quarter[41] - Ally Bank added 44 thousand net new deposit customers, totaling 3.4 million, with Millennials and younger customers forming the largest segment of new customers[41] Non-GAAP Financial Measures and Reconciliations This section defines and reconciles various non-GAAP financial measures to their GAAP equivalents, providing clarity on adjustments made to assess Ally Financial's core operating performance and capital adequacy Definitions of Non-GAAP Financial Measures and Other Key Terms This section provides detailed definitions for various non-GAAP financial measures used by Ally Financial, such as Adjusted EPS, Core ROTCE, and Adjusted Tangible Book Value per Share, explaining their purpose in assessing operating performance and capital adequacy, and outlining the adjustments made to GAAP measures - Non-GAAP financial measures are supplemental to GAAP and are used by management and investors to assess operating performance and capital[43] - Adjusted EPS adjusts GAAP EPS for strategic or non-operating items to better reflect core business performance[44] - Core Return on Tangible Common Equity (Core ROTCE) helps understand the company's ability to generate returns on its equity base supporting core operations[45] - Adjusted Tangible Book Value per Share (Adjusted TBVPS) provides a more conservative assessment of equity value by adjusting for goodwill, intangibles, and tax-effected Core OID balance[47] - Core Pre-Tax Income adjusts pre-tax income from continuing operations by excluding Core OID, changes in fair value of equity securities, and repositioning items to understand core business operating performance[51] - Net Interest Margin (excluding Core OID) and Net Financing Revenue (excluding Core OID) are used to better understand profitability and revenue generation by excluding bond exchange OID[55][56] Reconciliation to GAAP This section provides detailed reconciliations of various non-GAAP financial measures to their most directly comparable GAAP measures, illustrating the adjustments made for items such as Core OID, changes in fair value of equity securities, and repositioning, to derive adjusted metrics like EPS, ROTCE, and pre-tax income Adjusted Earnings per Share | Numerator ($ millions) | 3Q 25 | 2Q 25 | 3Q 24 | | :--------------------------------------------------- | :------ | :------ | :------ | | GAAP Net Income (Loss) Attributable to Common Shareholders | $371 | $324 | $171 | | Core OID | 17 | 16 | 14 | | Change in the Fair Value of Equity Securities | (27) | (35) | (59) | | Tax on: Core OID, Repo, & Change in Fair Value of Equity Securities (21% tax rate) | 2 | 4 | 9 | | Core Net Income Attributable to Common Shareholders | $363 | $309 | $136 | | Denominator (Weighted-Average Common Shares Outstanding, thousands) | 313,823 | 312,434 | 311,044 | | Adjusted EPS | $1.15 | $0.99 | $0.43 | Core Return on Tangible Common Equity (ROTCE) | Numerator ($ millions) | 3Q 25 | 2Q 25 | 3Q 24 | | :--------------------------------------------------- | :------ | :------ | :------ | | Core Net Income Attributable to Common Shareholders | $363 | $309 | $136 | | Denominator (Average, $ millions) | | | | | GAAP Common Shareholder's Equity | $12,508 | $12,066 | $11,733 | | Goodwill & Identifiable Intangibles, Net of Deferred Tax Liabilities (DTLs) | (187) | (241) | (710) | | Tangible Common Equity | $12,321 | $11,824 | $11,023 | | Core OID Balance | (696) | (713) | (759) | | Net Deferred Tax Asset (DTA) | (2,119) | (2,004) | (1,531) | | Normalized Common Equity | $9,506 | $9,107 | $8,733 | | Core Return on Tangible Common Equity | 15.3% | 13.6% | 6.2% | Adjusted Tangible Book Value per Share | Numerator ($ millions) | 3Q 25 | 2Q 25 | 3Q 24 | | :--------------------------------------------------- | :------ | :------ | :------ | | GAAP Common Shareholder's Equity | $12,793 | $12,223 | $12,090 | | Goodwill and Identifiable Intangible Assets, Net of DTLs | (187) | (187) | (707) | | Tangible Common Equity | 12,606 | 12,036 | 11,383 | | Tax-effected Core OID Balance (21% tax rate) | (544) | (557) | (594) | | Adjusted Tangible Book Value | $12,062 | $11,479 | $10,790 | | Denominator (Issued Shares Outstanding, thousands) | 307,828 | 307,787 | 304,715 | | Adjusted Tangible Book Value per Share | $39.19 | $37.30 | $35.41 | Adjusted Efficiency Ratio | ($ millions) | 3Q 25 | 2Q 25 | 3Q 24 | | :--------------------------------------------------- | :------ | :------ | :------ | | GAAP Noninterest Expense | $1,240 | $1,262 | $1,225 | | Insurance Expense | (374) | (424) | (365) | | Adjusted Noninterest Expense for Adjusted Efficiency Ratio | $866 | $838 | $860 | | Total Net Revenue | $2,168 | $2,082 | $2,135 | | Core OID | 17 | 16 | 14 | | Insurance Revenue | (453) | (452) | (467) | | Adjusted Net Revenue for Adjusted Efficiency Ratio | $1,732 | $1,646 | $1,682 | | Adjusted Efficiency Ratio | 50.0% | 50.9% | 51.1% | Original Issue Discount Amortization Expense | ($ millions) | 3Q 25 | 2Q 25 | 3Q 24 | | :----------------------------------------- | :------ | :------ | :------ | | GAAP Original Issue Discount Amortization Expense | $19 | $18 | $17 | | Other OID | (2) | (2) | (3) | | Core Original Issue Discount (Core OID) Amortization Expense | $17 | $16 | $14 | Outstanding Original Issue Discount Balance | ($ millions) | 3Q 25 | 2Q 25 | 3Q 24 | | :----------------------------------------- | :------ | :------ | :------ | | GAAP Outstanding Original Issue Discount Balance | $(708) | $(727) | $(780) | | Other Outstanding OID Balance | 20 | 22 | 29 | | Core Outstanding Original Issue Discount Balance (Core OID Balance) | $(688) | $(705) | $(751) | Net Financing Revenue (Excluding Core OID) | ($ millions) | 3Q 25 | 2Q 25 | 3Q 24 | | :----------------------------------------- | :------ | :------ | :------ | | GAAP Net Financing Revenue | $1,584 | $1,516 | $1,520 | | Core OID | 17 | 16 | 14 | | Net Financing Revenue (Excluding Core OID) | $1,601 | $1,532 | $1,534 | Adjusted Other Revenue | ($ millions) | 3Q 25 | 2Q 25 | 3Q 24 | | :----------------------------------------- | :------ | :------ | :------ | | GAAP Other Revenue | $584 | $566 | $615 | | Accelerated OID & Repositioning Items | — | — | — | | Change in Fair Value of Equity Securities | (27) | (35) | (59) | | Adjusted Other Revenue | $557 | $531 | $556 | Adjusted Total Net Revenue | ($ millions) | 3Q 25 | 2Q 25 | 3Q 24 | | :----------------------------------------- | :------ | :------ | :------ | | Adjusted Total Net Revenue | $2,157 | $2,064 | $2,090 | Adjusted Provision for Credit Losses | ($ millions) | 3Q 25 | 2Q 25 | 3Q 24 | | :----------------------------------------- | :------ | :------ | :------ | | GAAP Provision for Credit Losses | $415 | $384 | $645 | | Repositioning | — | — | — | | Adjusted Provision for Credit Losses | $415 | $384 | $645 | Adjusted Noninterest Expense | ($ millions) | 3Q 25 | 2Q 25 | 3Q 24 | | :----------------------------------------- | :------ | :------ | :------ | | GAAP Noninterest Expense | $1,240 | $1,262 | $1,225 | | Repositioning | — | — | — | | Adjusted Noninterest Expense | $1,240 | $1,262 | $1,225 | Core Pre-Tax Income | ($ millions) | 3Q 25 | 2Q 25 | 3Q 24 | | :----------------------------------------- | :------ | :------ | :------ | | Pre-Tax Income (Loss) | $513 | $436 | $265 | | Core Pre-Tax Income | $502 | $418 | $220 | Insurance Non-GAAP Walk to Core Pre-Tax Income | Insurance ($ millions) | GAAP 3Q 2025 | Change in fair value of equity securities | Non-GAAP1 3Q 2025 | GAAP 3Q 2024 | Change in fair value of equity securities | Non-GAAP1 3Q 2024 | | :----------------------------------- | :----------- | :---------------------------------------- | :---------------- | :----------- | :---------------------------------------- | :---------------- | | Premiums, Service Revenue Earned and Other | $364 | $— | $364 | $362 | $— | $362 | | Losses and Loss Adjustment Expenses | 141 | — | 141 | 135 | — | 135 | | Acquisition and Underwriting Expenses | 233 | — | 233 | 230 | — | 230 | | Investment Income and Other | 89 | (27) | 62 | 105 | (56) | 49 | | Pre-Tax Income from Continuing Operations | $79 | $(27) | $52 | $102 | $(56) | $46 | Additional Information This section provides an overview of Ally Financial, clarifies forward-looking statements and non-GAAP measures, defines key operational terms, and lists contact information for investor and media inquiries About Ally Financial Inc. Ally Financial Inc. is a diversified financial services company, recognized as the nation's largest all-digital bank and a leader in auto financing, offering a range of services including deposits, investment advisory, auto financing, insurance, and corporate finance solutions - Ally Financial Inc. (NYSE: ALLY) is a financial services company with the nation's largest all-digital bank and an industry-leading auto financing business[76] - The company provides deposits, securities brokerage, investment advisory services, auto financing, and insurance offerings[76] - Ally also includes a corporate finance business that offers capital for equity sponsors and middle-market companies[76] Forward-Looking Statements This section contains forward-looking statements subject to various risks and uncertainties, including economic conditions, interest rates, and strategic initiatives, which could cause actual results to differ materially from expectations. Readers are cautioned not to rely solely on these statements and to consult SEC filings for further disclosures - The release contains forward-looking statements about financial and operating metrics, performance, and future capital allocation, identifiable by words like 'believe,' 'expect,' 'anticipate,' and 'outlook'[80] - These statements are subject to assumptions, risks, and uncertainties, including general economic conditions, interest rates, monetary policies, balance sheet composition, and strategic initiatives[80] - Actual future results may differ materially from forward-looking statements, and readers should consult SEC filings for further disclosures[81][82] Non-GAAP Financial Measures Disclaimer The report includes specifically identified non-GAAP financial measures, which are supplementary to GAAP results and should not be considered in isolation. Reconciliations to GAAP are provided where feasible, but forward-looking non-GAAP measures may not be reconcilable due to forecasting difficulties - Non-GAAP financial measures supplement GAAP results and are useful to investors but should not be viewed in isolation or as a substitute for GAAP[83] - Reconciliations to comparable GAAP measures are provided, but forward-looking non-GAAP measures may not be reconcilable without unreasonable effort due to inherent forecasting difficulties[83] Key Term Definitions This section defines key operational terms used throughout the report, such as 'loans,' 'operating leases,' 'consumer,' and 'commercial,' to ensure clarity and consistent understanding of Ally's financial activities - The term 'loans' refers to consumer and commercial products including loans, retail installment sales contracts, lines of credit, and other financing products, excluding operating leases[84] - 'Operating leases' are consumer- and commercial-vehicle lease agreements where Ally is the lessor and the lessee is generally not obligated to acquire ownership[84] - 'Consumer' encompasses all consumer products related to loan and operating-lease activities, plus commercial retail installment sales contracts[84] - 'Commercial' includes all commercial products associated with loan activities, excluding commercial retail installment sales contracts[84] Contacts Contact information for Ally Investor Relations and Ally Communications (Media) is provided for inquiries - Investor Relations contact: Sean Leary, 704-444-4830, sean.leary@ally.com[85][86] - Media contact: Peter Gilchrist, 704-644-6299, peter.gilchrist@ally.com[85][86]