Ally Financial 2026 Conference Summary Company Overview - **Company**: Ally Financial (NYSE: ALLY) - **Date of Conference**: February 10, 2026 Key Points Financial Performance and Strategy - **2025 Performance**: Ally Financial reported strong operational execution across all business segments, leading to a 62% year-over-year increase in earnings [2][6] - **Strategic Shift**: The company has made a strategic pivot to focus on core franchises, which have evolved over the past 5-10 years, creating a durable competitive advantage [3][4] - **Core Franchises**: The core businesses include dealer financial services, corporate finance, and deposits, which are seen as essential for generating higher risk-adjusted returns [3][5] Business Segments - **Dealer Financial Services**: Ally is a diversified lender that has built strong relationships with dealer customers, resulting in record application flow and written premiums in insurance [4][18] - **Corporate Finance**: The corporate finance segment has a strong reputation for speed and collaboration, with an average annualized loss rate of about 30 basis points since going public in 2014 [5][29] - **Deposits Franchise**: The deposits business is described as the "oxygen" for lending operations, with 67 consecutive quarters of customer growth and a focus on customer experience [5][6][35] Guidance and Expectations - **2026 Guidance**: Ally expects to achieve mid-teens returns, contingent on maintaining a net interest margin in the upper threes and retail auto credit losses below 2% [9][12] - **Loan Growth**: Projected growth in average earning assets is expected to be between 2%-4%, with retail auto and corporate finance likely exceeding this range [38][40] - **Expense Management**: Ally aims for 1% growth in operating expenses while expecting revenue growth in the high single digits, indicating a focus on cost discipline [41][42] Competitive Landscape - **Increased Competition**: The auto finance sector has seen intensified competition, but Ally believes its comprehensive value proposition and long-standing relationships with dealers provide a competitive edge [16][19] - **Impact of New Entrants**: The recent charter approvals for GM and Ford by the FDIC are acknowledged, but Ally remains confident in its established market position and unique offerings [19][20] Risk Management and Credit Quality - **Credit Guidance**: The company has set a retail auto net charge-off range of 1.8%-2% for the year, with a focus on maintaining strong portfolio performance [21][22] - **Consumer Resilience**: Despite a slight increase in unemployment, Ally reports resilience in consumer behavior and confidence in its portfolio quality [23][24] Insurance Business - **Growth Potential**: The insurance segment is viewed as a key growth area, providing capital-efficient fee income and diversification benefits [24][27] - **Synergies with Auto Finance**: There are positive synergies between auto finance and insurance, with increased product density among dealer customers [27] Corporate Finance - **Growth Strategy**: Ally plans to grow its corporate finance segment responsibly, focusing on maintaining risk-adjusted returns and leveraging long-term relationships with private equity firms [28][30][31] Capital Management - **Capital Allocation**: Ally has room to grow its auto loan portfolio while also considering share buybacks, balancing growth opportunities with capital discipline [48][49] - **Valuation Considerations**: The company acknowledges its lower valuation compared to peers but believes that execution and achieving financial targets will ultimately drive stock performance [53] Conclusion - **Optimism for the Future**: The leadership team expresses strong confidence in Ally's growth trajectory across its core franchises, anticipating favorable risk-adjusted returns and a compelling financial outlook [54]

Financial Data and Key Metrics Changes - The corporate finance business has grown from $2 billion in 2014 to $10 billion today, indicating strong asset growth and profitability [35][37] - The company expects to see double-digit percentage growth year-over-year in consumer auto originations, with yields consistent with strong first-quarter results [60] Business Line Data and Key Metrics Changes - The dealer financial services business has evolved to provide a full spectrum of products and services, enhancing its competitive advantage [6][10] - The corporate finance segment has generated significant fee income, with about 20% of gross revenue coming from fees, particularly syndication income [38][39] Market Data and Key Metrics Changes - The competitive landscape has seen traditional lenders re-entering the deep subprime segment, while the company focuses on the middle credit segments, which are deemed to provide the best risk-adjusted returns [21][22] - Consumer demand remains healthy, with transaction prices being monitored closely, indicating a stable market environment [30][31] Company Strategy and Development Direction - The company emphasizes a "power of focus" strategy, diversifying within its core business areas to drive growth in fee revenue and origination channels [14][15] - The corporate finance business is viewed as a critical driver for achieving mid-teens returns, with a commitment to maintaining conservative credit standards [57] Management's Comments on Operating Environment and Future Outlook - Management remains cautious about macroeconomic factors such as tariffs and their potential impact on vehicle affordability, but believes the company is well-positioned due to a conservative purchase policy and strong credit performance [24][26] - The company is optimistic about its credit portfolio, with low delinquency rates and a focus on maintaining healthy vintages [32][66] Other Important Information - The company has invested significantly in digital technologies to enhance consumer engagement and improve collection processes [33] - The corporate finance business is expanding into new verticals, including infrastructure and energy, which are expected to drive future growth [47][50] Q&A Session Summary Question: How is the company navigating increased competition in the market? - Management noted that competition is balanced, with more aggressive pricing in the super prime segment, but the company remains focused on the middle credit segment where it has a competitive edge [21][22] Question: What is the company's approach to managing credit risk? - The corporate finance business emphasizes a conservative approach to credit risk, with a strong focus on assessing and managing secured commercial credit risk [55] Question: How does the company plan to achieve mid-teens returns? - The strategy includes net interest margin expansion, normalizing credit losses, and disciplined expense management, with a clear path outlined for achieving these goals [64][67]