Ally Financial at Barclays Conference: Simplification and Growth Focus

On Tuesday, 09 September 2025, Ally Financial Inc (NYSE:ALLY) presented at the Barclays 23rd Annual Global Financial Services Conference. Chief Financial Officer Russell Hutchinson outlined the company’s strategic initiatives to streamline operations, exit non-core businesses, and enhance financial performance. While Ally’s focus on core segments like Dealer Financial Services and Corporate Finance shows promise, challenges remain, such as a slight reduction in average earning assets due to business exits.

Key Takeaways

• Ally Financial has exited non-core businesses to focus on core areas like Dealer Financial Services and Corporate Finance.
• The company aims to achieve a sustainable high 3% net interest margin (NIM) and has guided towards the higher end of a 3.40% to 3.50% range for the year.
• Credit quality is improving, with charge-offs and delinquencies down year-over-year.
• Ally expects flat expenses for the year and projects low single-digit growth in expenses going forward.
• The company plans to resume share repurchases but has not specified a timeline.

Financial Results

• Net Interest Margin (NIM):

- Reached the upper 3% range.

- Increased by 10 basis points last quarter despite a 20 basis point impact from selling the card portfolio.

- Target to maintain a sustainable high 3% NIM.

• Balance Sheet:

- Earning assets expected to grow at a low single-digit percentage beyond this year.

- Retail auto and corporate finance assets projected to grow at a mid-single-digit percentage.

- Average earning assets guided down 2% for the year.

• Credit Quality:

- Charge-offs and delinquencies have decreased year-over-year.

- Charge-off guidance remains at 2.00% to 2.15%.

• Expenses:

- Flat expenses expected for the year, with low single-digit growth projected going forward.

• Fee Income:

- Anticipated mid-single-digit growth, driven by insurance and Corporate Finance.

Operational Updates

• Dealer Financial Services:

- Record application volume and strong originations in the first half of the year.

• Corporate Finance:

- Increased outstandings and active in leading transactions and syndicating loans.

• Digital Bank:

- Strong customer growth and retention.

• Underwriting:

- Dynamic process with constant adjustments based on real-time performance.

Future Outlook

• Growth in Core Businesses:

- Focus on expanding Dealer Financial Services, Corporate Finance, and the Digital Bank.

• Net Interest Margin (NIM):

- Continued improvement expected, aiming for a sustainable high 3% NIM.

• Balance Sheet Growth:

- Earning assets projected to grow at a low single-digit percentage.

• Capital Management:

- Plans to resume share repurchases in a timely manner.

• Expenses and Fee Income:

- Flat to low single-digit growth in expenses expected, with fee income growing at a mid-single-digit rate.

Q&A Highlights

• Competitive Landscape:

- Ally remains a preferred partner for dealers and OEMs despite competitors returning to the auto finance space.

• Deposit Pricing:

- Target deposit rate of around 70%, with a focus on building a resilient deposit franchise.

• Credit Quality:

- Confidence in current credit quality and front book performance.

• Capital and Regulation:

- Balancing growth support with capital building and monitoring regulatory changes, including Basel III.

For a deeper understanding of Ally Financial’s strategic direction and financial performance, readers are encouraged to refer to the full transcript of the conference call.

Full transcript - Barclays 23rd Annual Global Financial Services Conference:

Unidentified speaker, Interviewer: Great. Next up, very pleased to have Ally Financial with us. From the company, Russell Hutchinson, Chief Financial Officer. Russ, thanks for being back.

Russell Hutchinson, Chief Financial Officer, Ally Financial: Great, thanks for having me.

Unidentified speaker, Interviewer: We 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 start big picture. Obviously a busy first half of the year for Ally Financial. As you sit here today, some of the actions you’ve taken to improve the financial results, just kind of how you’re feeling about the world.

Russell Hutchinson, Chief Financial Officer, Ally Financial: Yeah, no, it’s a great question. We feel really good about the world. I mean, we’ve taken a lot of actions to make Ally Financial simpler, a more focused organization, and reduced risk. We’ve exited non-core businesses. We’ve increased our capital position. We’ve improved our underwriting and our servicing. We’ve taken steps like the repositioning of our securities portfolio to reduce interest rate risk. We’ve also taken meaningful steps to arrest the growth of expenses within the company, positioning ourselves for positive operating leverage going forward. We look across our core businesses, Dealer Financial Services, Corporate Finance, the Digital Bank. We are focused. It’s an exciting opportunity for us and for our teammates to deploy our resources against businesses where we have relevant scale, we have deep relationships, and we have differentiated products and a differentiated brand.

We have every reason to win in the core businesses that we’re focused on today. It’s an exciting time for us, and we think we’ve gotten a lot accomplished in terms of positioning Ally Financial for the future.

Unidentified speaker, Interviewer: I guess maybe just delve a bit more into that. You know, you talked about reducing risk, increasing capital. You know, you’ve scaled back mortgage operations, you’ve sold credit cards. We’ve seen some expense improvements. Earnings were up quite strongly in the second quarter. I guess is kind of all of the hard work behind you and, you know, now we’re kind of at an inflection point, and we can start to see the improvement in returns or just how you’re thinking about kind of the trajectory from here.

Russell Hutchinson, Chief Financial Officer, Ally Financial: Great. I’m pleased to say that the results that we’ve been delivering show real progress towards our medium-term targets. They reflect traction that we’ve seen across our customer base across all three of our core franchises. If you look at our Dealer Financial Services franchise, we’ve had record application volume in the first half of this year that reflects strong engagement among our dealers. We’ve translated that into strong originations volume, again, reflecting the strength of that franchise. Our Corporate Finance outstandings are up. When you look at our Digital Bank, our customer growth and our retention are strong. Across all three of our franchises, I think we are demonstrating results in terms of moving those franchises forward.

It’s translating into the bottom line, as you see, in terms of the improvement in our margins, the progression in terms of our credit, and just that discipline that we’ve exercised across our expense space. When you look at our franchises and where we’ve chosen to focus, we’ve chosen to focus in large fragmented markets where we have a lot of opportunity for growth. I think we’ve done a lot. We’ve taken a lot of steps to position the company here. Where we’re positioned now, I think strategically, we’re in a better position than we’ve been in for years.

Unidentified speaker, Interviewer: Got it. You mentioned, you know, medium-term targets and certainly the net interest margin, we’ve been reaching the upper 3% range, is probably the most impactful variable to kind of get into your return targets. You actually had NIM up 10 basis points last quarter despite a 20 basis point adverse impact from selling the card portfolio. I know there was kind of some other puts and takes in the second quarter. Maybe just talk to you in terms of how you see the margin trending in the back half of this year. I’m told the Fed’s going to cut next week and just how does that impact near-term, longer-term results?

Russell Hutchinson, Chief Financial Officer, Ally Financial: Yeah, look, I think the second quarter demonstrated solid progress towards our high 3% sustainable NIM target. A lot of the factors that drove that, the asset repricing, the optimization of our portfolio, the discipline that we’ve been showing in pricing both our deposits and our retail auto loans, all those things remain intact. It’s not going to be a straight line, of course, and we’ll see those factors play in differently in different quarters, but it’s allowed us to guide people towards the higher end of our full-year NIM range. We feel pretty good about the progress that we’ve demonstrated. It reflects not only discipline on our part, but also some real tailwinds in our business that we think have some legs to them and give us a lot of confidence, not just meeting our high 3% NIM target, but actually doing it on a sustainable basis.

We are setting the business up to be able to sustain attractive higher margins for the foreseeable future.

Unidentified speaker, Interviewer: Got it. Maybe put up the next ARS question. I guess on that front, you talked earlier about the strong auto, retail auto performance in the first half of the year. Just maybe talk to, I guess in the past you’ve talked about kind of keeping the balance sheet stable and maybe potentially down given what’s going on in the commercial side. Just talk to, you know, maybe we should see balance sheet growth, particularly talked in the past on the consumer finance side. You talked about strong auto production in the first half of the year. Maybe just talk about your thoughts on just balance sheet growth in general in management.

Russell Hutchinson, Chief Financial Officer, Ally Financial: Yeah, look, I mean, as I said earlier, we’ve positioned Ally Financial for growth going forward and, you know, we’ve deliberately focused on large fragmented markets that present to us a lot of opportunity, but we’re disciplined. We’re growing in the places where we want to grow, and you’ll see our balance sheet emphasizing our retail auto loan product and our corporate finance product. Those are the products, you know, they generate higher margins, and they’re businesses that we’ve been in for a long time. Again, we’ve got that relevant scale. We’ve got deep relationships and we’ve got every reason to win. We are absolutely growing our balance sheet in the places that we want to grow.

That being said, this year we’ve guided to average earning assets down 2% for the year, and that’s driven by the exit of the credit cards business, putting our mortgage operations in runoff, and a number of the things where we’re de-emphasizing the businesses and the product areas that are lower margin for us and lower return and, quite frankly, from an interest rate perspective, don’t meet our balance sheet or don’t meet our balance sheet needs. I think it’s important to point out that when you look at end-of-period assets, our expectation is for end-of-period assets to be nearly flat. That’s driven by growth in the places where we really want to grow in retail auto loans and corporate finance. As you pointed out, the first half of the year has been excellent on the Dealer Financial Services front.

Our application volume in the first two quarters were both records. We sit here with strong application volume in the third quarter, and we’re on track for a record year in terms of application volume. We’ve translated that into really strong originations activity. We’re not just growing for the sake of growing. We’re very disciplined and our application volume affords us a position where we can be selective about managing towards risk and return. That’s exactly what we’ve done. We’ve applied the same discipline to our corporate finance business as well. We’re growing those, but we’re growing them in a responsible and disciplined way with an eye towards both risk as well as return.

Unidentified speaker, Interviewer: Like I said, maybe looking further out into next year, maybe back up just kind of more nearer term, you talked about margin being the upper half of that 345 to 350 range or 340 for the full year or 345 last quarter. It sounds like we should expect kind of continued expansion in the back half of the year.

Russell Hutchinson, Chief Financial Officer, Ally Financial: Yeah, we’ve guided towards the high end of our range. Our range was 340 to 350, so we’re guiding towards the upper half of that range. That implies continued improvement in them. It’s not a straight line, and as we’ve discussed many times before, the pace, the timing, the frequency of Fed actions will impact the quarter-to-quarter dynamic in terms of that NIM progression. The medium-term target is unchanged. It doesn’t affect our drive and our confidence in getting to a high three sustainable NIM over time.

Unidentified speaker, Interviewer: In your comment to balance your growth, you have kind of the headwind this year from the card sale, obviously, commercial floor plan. As you think about balance your growth beyond this year, can you begin to restart to grow earning assets?

Russell Hutchinson, Chief Financial Officer, Ally Financial: Absolutely. I think it’s our expectation that we’ll grow earning assets beyond this year going forward, call it a low single-digit %. Within that, if you just were to focus on retail auto and corporate finance, those assets we expect to grow at more of a mid-single-digit %. Absolutely, the growth is there and we expect to see that growth expressed as you move forward into 2026 and beyond.

Unidentified speaker, Interviewer: You mentioned kind of record application volume in auto. There’s been several competitors starting to lean back into the space. I just came from Wells Fargo and they talked about their new relationship with Audi. Just maybe talk to how you view the current competitive landscape and kind of just what your outlook for the volume and pricing.

Russell Hutchinson, Chief Financial Officer, Ally Financial: Yeah, look, the first half of the year we saw competitors come back. I think it’s other folks recognizing the attractiveness of the asset class. That being said, we’re still a preferred partner for a lot of our dealers and for our OEMs. I mean, I think they value our all-in value proposition. You know, we’re there for them through the cycle. We speak for a large portion of the credit spectrum, and we provide them with an all-in value proposition that combines access to our SmartAuction platform, floor plan financing, insurance products both for the floor plan as well as in the F&I office. We provide a lot of value to our dealers and it puts us in a preferred position as a partner.

That’s why we’ve been, even amidst more competition from some of the folks you mentioned, we’re still in this position where we’re driving record application volumes and we’re showing significant origination volume growth.

Unidentified speaker, Interviewer: Got it. Maybe shifting gears to deposits. You know, you’ve seen kind of deposit pricing come down early in the year. You talked about a target rate of around 70%, which is, I think, where you are currently. You know, the Fed is on the verge of easing, we think. Let me just talk to how you think about that 70% data and maybe more broadly, how do you think about growth and customer acquisition as this rate cycle evolves?

Russell Hutchinson, Chief Financial Officer, Ally Financial: Yeah, we’ve built a really resilient deposit franchise. It’s a real asset for Ally Financial. It’s really different from other deposit franchises that are out there, and that’s something that we particularly value about our franchise. Our customers choose us because of trust, because of a top-notch digital experience, because of the all-in value proposition and the product offering. It’s not just about price. Offering a compelling price is important. It’s something that’s a valuable part of our proposition, but that’s not all that it’s about. We think we have a fantastic deposit franchise.

I think the consistency in terms of customer growth and the strong retention that we have are evidence of the strength of the franchise, as well as the fact that when you look at the recent history of price changes in terms of deposit pricing, we’ve tended to be a leader and the market has tended to follow us. I think all of that speaks to the overall strength of our deposit franchise. You mentioned betas. I think the last year actually provides a pretty good case study in that respect. If you rewind a year ago, you saw the Fed take action pretty quickly with multiple rate cuts at the end of last year.

Our deposit betas performed exactly the way that we expected them to, in that price actions were slow in the beginning, but ultimately our price actions caught up, our betas caught up and ended up exactly where we thought they’d be by the time you got to the first half of last year. I’d say that’s a great case study in terms of how you think things ought to progress going forward. The pace of Fed cuts, the magnitude of Fed cuts, the actual timing of Fed cuts, they’ll introduce variability in terms of how all that plays out and of course the overall competitive environment. I think what we went through last year provides a pretty good case study and a pretty good roadmap for what to expect going forward.

Unidentified speaker, Interviewer: Before we move off of NAI, we asked the audience when they expect Ally to get to the upper 3% NIM area. The consensus in the room was second half of next year. I’m not sure what your model has.

Russell Hutchinson, Chief Financial Officer, Ally Financial: We have been very deliberate about not promising a specific NIM in a specific quarter. It speaks to that quarter-over-quarter dynamic that I mentioned earlier, right? The pace, the timing, the magnitude of Fed actions are going to impact our NIM progression as you go quarter to quarter. It doesn’t change fundamentally the overall destination, and it doesn’t significantly change the overall timing. It just affects that quarter-to-quarter progression. I can’t argue with that.

Unidentified speaker, Interviewer: Maybe they shift gears to credit quality, which was a big focus at this event last year. It feels like the momentum has shifted, because you look at the second quarter charge-offs were down on a year-over-year basis for the second straight quarter. Delinquencies down on a year-over-year basis for the first time in, I think, like five years. Yeah, on the earnings call, you kind of brought down the upper end of the charge-off range. I felt like it could have come down maybe a little bit further just based on the other trends we’re seeing. Maybe just talk to kind of what’s driving the current performance, and just how you kind of see the loss cycle playing out.

Russell Hutchinson, Chief Financial Officer, Ally Financial: Yeah, look, our message on losses has been pretty consistent all year, right? We like to think about it in terms of a framework where we kind of think about three things: delinquencies, what goes to loss or flow to loss during a particular period, and then severity, heavily influenced by used car prices. Across all three of those factors, things have been pretty constructive this year so far and at the tail end of last year as well. If you think, for example, just in terms of delinquency, as you pointed out, delinquency was down. Delinquency continues to trend really nicely, and we’re kind of very pleased with where that’s going. In terms of flow to loss, we continue to have a constructive flow to loss trend that’s continued throughout the year.

In terms of used car prices, used car prices continue to be constructive, supporting us from a severity perspective. I’d say the message is very consistent to what we’ve said before. Continuation of the trends that we’ve been seeing would take us towards the low end of that loss range. I should also say that is also supported by the fact that we’ve got a front book that continues to outperform our expectations at the time when we priced it. Again, kind of very similar message to what we’ve talked about before. Of course, there’s a lot of noise in the macro. I don’t think our borrowers have noticed. Our borrowers continue to be very resilient. Consumer credit’s been resilient, but there is a lot of noise in the macro.

To the extent that we saw a pickup in unemployment, to the extent that we saw the used car prices change in a significant way, that could obviously change the course. Right now and for the last, so far this year, it actually has felt pretty constructive.

Unidentified speaker, Interviewer: Could you just put up the next ARS question? I’ll ask a follow-up, but I guess Russ is to be clear. You originally were saying 2 and 2.25 for your charge-off guidance on earnings. You said 2 to 2.15 for charge-offs. That’s right. Now you’re saying the low end of 2 to 2.15?

Russell Hutchinson, Chief Financial Officer, Ally Financial: No, I’m saying the exact same thing we said at the end of the second quarter. Quite frankly, it’s the same thing we said after the first quarter as well, which is if we see a continuation of the trends that we’ve been seeing so far this year, that takes us to the low end of our guidance range. We’re not changing our range. It’s $2.00 to $2.15, and we’re just pointing to the circumstances that would take us to the low end of that range, versus some of the risks like unemployment, the macro, et cetera, that could take us to a different part of the range.

Unidentified speaker, Interviewer: The range is still 2 to 215, but you’re feeling good.

Russell Hutchinson, Chief Financial Officer, Ally Financial: That’s right.

Unidentified speaker, Interviewer: Fair enough. Could you just maybe talk about underwriting in general? I guess you’re feeling good about credit quality, certainly a lot better today than we did a year ago. It’s obviously a dynamic macro environment. You just kind of played out several of the puts and takes. As you look ahead, how do you see the opportunities to optimize risk, given the curtailments you put in place in 2022 and 2023? I think STR originations were over 40% for the last several quarters. Now we’re feeling better. How do you think about that dynamic?

Russell Hutchinson, Chief Financial Officer, Ally Financial: Yeah, look, our underwriting, it’s a dynamic process. We look at it very much on a real-time basis, and we look at it at a very granular basis. We look in particular at how our front book is performing relative to our expectations. We spend a lot of time analyzing what we call micro-segments. For example, coming out of the post-pandemic period, we saw interesting trends in folks that have high payment sizes. A lot of the micro-segments that involved high payment sizes have been curtailed. Some of that curtailment is through pricing actions where we’ve priced ourselves to be less competitive. In some cases, we’ll cut segments off entirely and we won’t approve them at any price. We’ve taken a number of those actions that we think significantly improved our underwriting and contributed to some of the favorability that we’re seeing in our front book.

As we look at our performance now, we’ve also learned from micro-segments that outperformed our expectations even through the post-pandemic period. One example of that would be aged vehicles, which have traditionally underperformed. We look at it on a micro-segment basis. We have an aged vehicle, a low monthly payment, strong borrower credit. We found segments like that that actually have tended to outperform. Where we are is in that kind of constant tweaking of our underwriting. We continue to look for segments like that, to experiment with those segments, starting with manual approvals and then ultimately moving them to auto approvals. That’s a continuous process. That’s something that we do as a matter of course, and we expect we’re going to continue to keep doing that. The favorability that we’ve seen in front book performance certainly supports that approach.

You’re not going to see a quarter where we go from underwriting 40+% S-tier to sub-30% S-tier in one bang. We’re not going to flip a switch. It’s going to be organic. It’s going to be dynamic, and it’s going to be a constant tweaking of our underwriting to make our underwriting better in a very granular and analytical way.

Unidentified speaker, Interviewer: Got it. We asked the audience about your 2026 charge-off guidance. 1.8% to 2% is by far the most used answer.

Russell Hutchinson, Chief Financial Officer, Ally Financial: That’s interesting. We will give a 2026 retail NCO guide in January.

Unidentified speaker, Interviewer: On capital, you know, we talked earlier about several steps you’ve taken to optimize capital. Just how should investors think about your capital management framework going forward? When might share repurchase realistically come back into the conversation? Is there any guidelines or levels that we can see from an external perspective that we should view as indicating your level of comfort to resume capital distribution?

Russell Hutchinson, Chief Financial Officer, Ally Financial: Yeah, look, when we think about capital, we’re really balancing the need to support growth in our businesses, in the businesses that we want to grow, against our desire to build capital and have a solid, solid balance sheet. As you know, there’s been some movement on the regulatory side. There was a Basel III proposal a few years ago that would have AOCI count towards capital, which would impact our capital position negatively. Our expectation is the regulators continue to work on Basel III, so there’s still some real uncertainty in terms of where the capital regulations end up. Until we get told otherwise, we’ve been managing assuming that AOCI will eventually feed into capital and affect us negatively. We’ve been in capital build mode as a result of that.

We’ve taken a number of steps, including the issuance of CRTs, including the discipline that we apply to our portfolio of businesses and the exit of our non-core businesses. We’re pleased with our ability to build capital through those means. I’d also say now we’re positioning, we’re transitioning to a point where our organic capital generation from earnings is getting a lot stronger, and we feel good about that. There’s a lot of positive things going on with capital, both in terms of where we are as well as our trajectory, given our earnings profile, and then the optionality that we’ve developed through things like these credit risk transfer transactions. We’re increasingly feeling better about our capital position. That being said, the timing around share repurchases, look, it’s important to us.

Our business is one that should generate excess capital and where we should be buying back stock, and it’s certainly our expectation to return to that in a timely fashion. As far as the timing of that goes, we’re not going to offer you real clarity to that right now, but I can tell you it’s important to us, and it’s at a capital level that’s probably a little higher than where we are today, maybe not all the way to our 9% management target on a fully phased-in basis, but certainly higher than where we are today, where we have visibility around enough organic earnings generation that we feel really good about the trajectory. Of course, to the extent that there are changes in regulations that could impact us as well in terms of how we think about that capital projection, that capital progression.

Unidentified speaker, Interviewer: A few follow-ups, could you put up the next ARS question? You mentioned AOCI, and even if it kind of comes into capital, or the SE opt-out goes away, I guess the better way to say it, it’ll likely be on a very phased-in basis. I think to date, every one of those securities has matured apart, and that will just kind of burn off over time anyway. How much of a headwind is that? Were you just more just optically that you just want to be mindful of where that stands?

Russell Hutchinson, Chief Financial Officer, Ally Financial: Look, I don’t see it as a real headwind. I think you’re right on, if it does come into capital, there’ll be a transition period. There’ll probably be other puts and takes in the regs that’ll impact us. I think, as prudent stewards of capital and of the organization, of course, we plan for what we probably think is the worst, which is the Basel III proposal from whatever, two and a half years ago. Even with that proposal, we feel pretty good about our capital trajectory. We’ve done a lot of things to demonstrate our ability to generate capital through the balance sheet, and we’re now at the point where our earnings are starting to generate meaningful amounts of capital as well. Even in what we would consider to probably be a worst-case scenario, we feel pretty good about our capital trajectory.

Again, I do expect we’ll get back to repurchasing shares, and I think we’ll be kind of more than well positioned to meet the requirements of any phase-in period.

Unidentified speaker, Interviewer: You got the room kind of split between first half and second half of next year.

Russell Hutchinson, Chief Financial Officer, Ally Financial: Yeah, I mean, we’re not going to give you a specific timeline, but when it doesn’t look unreasonable.

Unidentified speaker, Interviewer: Just one more follow-up before we get off of capital. You mentioned the CRT transactions or credit risk transfers. Maybe walk us through the rationale behind that move. I know they’re capital efficient, but you’re giving up, I guess, earnings at some point. Just kind of how you’re thinking about those transactions, the ones you’ve done and maybe prospectively going forward.

Russell Hutchinson, Chief Financial Officer, Ally Financial: Yeah, they’re highly capital efficient. You know, the last one we did, we took a $5 billion pool of retail auto loans. We basically kind of put them into a credit risk transfer (CRT) structure and effectively bought insurance against credit losses on those loans in the capital market by issuing a roughly $550 million note. Super capital efficient. I mean, the effective cost of capital for that, when you look at the capital benefit from reducing the risk weights as a result of having that insurance in place, the effective cost of capital is very low, much lower than our overall cost of capital. We see it as a very efficient way of managing the balance sheet and supporting our capital levels and positioning us ultimately to continue to support our dealers and to speak for a large portion of originations in the market.

What’s interesting about it is that capital benefit is tied to the actual assets. The assets are by nature relatively short duration, right? They’re auto loans. In the case of the assets that we put into these pools, it’s seasoned collateral. It’s already aged out about six months on average. When you look at the remaining duration, it’s probably sub two years. It’s relatively short-dated capital. We’re mindful of the fact that the capital benefit from these CRTs runs off with the assets over a relatively short duration. Of course, we continue to originate. It’s important to us that we’re able to continue to originate and continue to support our dealers. We’re careful about not putting ourselves on a treadmill at a speed that we can’t keep up with. That is, we’re mindful of the fact that RWA comes back.

We’ve been disciplined, we’ve been opportunistic, and we’ve been thoughtful about the volume and the timing of when we issue CRTs, not to put ourselves in a position where we’re dependent on what is ultimately a capital markets transaction. We’ve done $12 billion of CRTs so far. We probably have about $9.5 billion on the books. We’ve done a significant amount of volume, but again, we’re very conscious of just the duration of that capital and the treadmill, so to speak, that it creates and making sure, again, that we’re not creating a dependency. Look, we’re going to do more CRT. We see it as a very useful tool in our box and just helpful to managing the balance sheet and optimizing our overall return profile.

Unidentified speaker, Interviewer: Got it. Maybe just on expenses, you’ve talked to kind of flat expenses for the year. Is that still the case? How are you balancing investments across the core franchises? Where’s the opportunities for growth versus kind of cost management?

Russell Hutchinson, Chief Financial Officer, Ally Financial: Yeah, it’s right as you think about the full year. I would say when you look at individual quarters, there’ll be a little bit of noise in the third quarter, just giving year-over-year comps. Overall, managing expenses is important to us. That’s been a big focus for us over the last couple of years. As you know, Ally Financial went through a period where the institution was investing in a lot of good places in terms of building the infrastructure we have today, but we’ve taken a really disciplined approach. We’ve arrested that expense growth, and we’ve positioned the company for positive operating leverage going forward. We’re going to continue to do that. As you think about expense growth going forward, think about it in terms of kind of flat to low single-digit % growth on a year-over-year basis, coming out of this year.

Unidentified speaker, Interviewer: Okay. I guess the last guidance point we haven’t talked about is, on the fee side. I think you’ve talked to, you know, flat other revenue year-over-year for the flat fee income, for 2025, despite the fact that we’ve lost credit card and mortgage. Based on our math, if we kind of adjust for that, it seems like it’s mid-single-digit growth. I don’t know if you could help me out with that. You know, how should we think about the run rate for that? Is, you know, mid-single-digit growth, you know, how we should think about for next year? You know, you talked, you gave us some expense color for next year or how to think about that going forward. Maybe you can do the same thing on the fee side.

Russell Hutchinson, Chief Financial Officer, Ally Financial: Yeah, no, your math is right. Mid-single digits, going forward is the right way to think about that. When you kind of get underneath that, a lot of our fee revenue comes from the insurance business. Again, we’re continuing to see strong engagement from our dealer population. We’re really leveraging the benefit of being in the dealership. Being in the dealership on the auto financing side awards our insurance colleagues really an inside track in terms of securing insurance business, both on floor plan as well as in the F&I office. We’re going to continue to leverage that and continue to grow that business. We’ve also got great traction with our SmartAuction product and with our pass-through program. We’ve got a number of sources of other income on the auto side of the house. An important source of other income for us has been in the Corporate Finance business.

That’s a business where we are in almost all cases leading the transactions that we underwrite. We’re a credit shop. We’re doing the hard underwriting and the structuring, and that puts us in a position where we can offer other banks the opportunity to participate effectively in syndications of our loans. That creates fee income for us. It’s actually historically been a pretty good, it’s a lumpy source of fee income, but it’s been a pretty good source of fee income. Again, we’re leaning into growth in that business, and our expectation is we’ll continue to see more opportunities there. Aside from exiting credit cards and mortgage operations, we’ve got a number of engines of growth there. I think your math in terms of mid-single digits is exactly right.

Unidentified speaker, Interviewer: Got it. Maybe we’ll put up the next ARS question. Russ, as we come towards the end of the time, maybe I should ask more broadly. Is there anything you’d like to share on how the quarter’s shaping up that we haven’t talked about or how you think about the rest of the year?

Russell Hutchinson, Chief Financial Officer, Ally Financial: Yeah, sure. Maybe I’ll just start with, you know, we give full-year guidance. We’ll start with full-year guidance. No change to full-year guidance. You know, if I kind of think about, you know, what are the key messages today? What do I want you to take away from it? I’d say, look, we’ve taken a number of important actions to make Ally Financial simpler, more focused, and to take risk off the table. You know, that being said, we’re positioned for growth in our core businesses where we have a long runway for growth and the fact that there are large fragmented markets where we’re positioned, with leading franchises. I’d say as you look at second quarter and you look at our results over the coming quarters, I think we’ve demonstrated strong progress towards our medium-term targets, and it’s our expectation that we’re going to continue to do that.

Unidentified speaker, Interviewer: Got it. We’ve got maybe four more minutes remaining. I’m not sure there’s questions from the audience. I guess, Russ, as the audience thinks of stuff, maybe just kind of, you know, we ask the audience, you know, what would cause them to be more constructive on the shares of Ally? You know, increasing ROE is certainly one, followed by improvement in credit, would be two. I feel like a lot of the stuff you talked about today drives that ROTCE higher.

Russell Hutchinson, Chief Financial Officer, Ally Financial: Yeah, look, I think number two drives number four. We’re working on all those things.

Unidentified speaker, Interviewer: Is mid-teens kind of ROTCE still the right place to think about Ally?

Russell Hutchinson, Chief Financial Officer, Ally Financial: Absolutely. When we look at kind of how we think about the business, the actions we’ve taken to focus on our core and the discipline that we’re exercising within the core in terms of pricing on both the asset side as well as the liability side, we’re setting ourselves up for durable, sustainable higher margins to support that mid-teens return target. It’s sustainable, it’s long-term, it’s how we’re positioning and running the business.

Unidentified speaker, Interviewer: Any other questions? I guess, Russ, I think it’s a good person to ask. I guess we hear a lot about the tariffs impacting the auto industry relatively more than other segments, and it’s kind of evolving. Maybe just talk to how you kind of see that playing out. You know, obviously you’re in constant contact with elite dealers. How are they kind of just managing this dynamic environment?

Russell Hutchinson, Chief Financial Officer, Ally Financial: Yeah, I mean, the dealers are a very resilient bunch. They’re entrepreneurial by nature, and they’ve got a great history of working through a number of changes in the market and the environment and automotive technology. They’re handling this in stride. As we look at the year to date, the application flow, the origination volume flow, the strength in used car sales, all those are evidence of dealers managing through this in a constructive way. I think people are starting to get used to the idea that the tariffs are there and they’re still moving around in terms of quantum and size and everything else. As we look at the year, there’s a good chance we saw some pull forward in a number of areas as a result of tariffs, also as a result of changes in the EV lease tax credits.

We’ll continue to see some noise in terms of just kind of overall level of vehicle sales volumes. We’ll probably see some continued movement in terms of how people think about pricing, as well as discounts. Overall, I think the industry is handling it. I’ve been pleased by the resilience we’re seeing among our dealers, and the resilience we’re seeing among our customers too and our borrowers.

Unidentified speaker, Interviewer: Great. On that note, please join me in thanking Russell Hutchinson for his time today.

Russell Hutchinson, Chief Financial Officer, Ally Financial: Great, thank you.

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