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

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

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

Company Performance - Ally Financial reported quarterly earnings of $0.95 per share, exceeding the Zacks Consensus Estimate of $0.57 per share, and up from $0.83 per share a year ago, representing an earnings surprise of 66.67% [1] - The company posted revenues of $2.1 billion for the quarter ended September 2024, surpassing the Zacks Consensus Estimate by 2.01%, compared to year-ago revenues of $1.97 billion [1] - Over the last four quarters, Ally Financial has surpassed consensus EPS estimates four times and topped consensus revenue estimates three times [1] Market Performance - Ally Financial shares have increased approximately 2.6% since the beginning of the year, while the S&P 500 has gained 22.5% [2] - The current Zacks Rank for Ally Financial is 4 (Sell), indicating expected underperformance in the near future [4] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $0.81 on revenues of $2.12 billion, and for the current fiscal year, it is $2.77 on revenues of $8.17 billion [4] - The trend for estimate revisions ahead of the earnings release was unfavorable, which may change following the recent earnings report [4] Industry Context - The Financial - Consumer Loans industry is currently in the top 43% of over 250 Zacks industries, suggesting that stocks in the top 50% outperform those in the bottom 50% by more than 2 to 1 [5] - Open Lending, another company in the same industry, is expected to report quarterly earnings of $0.05 per share, reflecting a year-over-year change of +150%, with revenues anticipated to be $29.46 million, up 13.3% from the previous year [5]

Ally Financial Inc. 3Q 2024 Earnings Review October 18, 2024 Contact Ally Investor Relations at (866) 710-4623 or investor.relations@ally.com 3Q 2024 Preliminary Results 2 Forward-Looking Statements and Additional Information This presentation and related communications should be read in conjunction with the financial statements, notes, and other information contained in our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K. This information is preliminary and base ...

Financial Performance - Ally Financial reported a consolidated net income of $300 million for Q3 2024, representing a 15% increase year-over-year[1]. - Net income attributable to common shareholders reached $330 million, reflecting a 64% increase compared to Q3 2023[7]. - Earnings per share (basic) for Q3 2024 was $1.07, a 23% increase from Q3 2023[7]. - Core net income attributable to common shareholders was $295 million in Q3 2024, compared to $299 million in Q2 2024, showing a slight decline[26]. - Total net revenue for Q3 2024 was $2,103 million, an increase of 5.2% compared to $2,000 million in the previous quarter[31]. - Total net revenue for 3Q 24 was $138 million, a 4% increase compared to 3Q 23[17]. Loan and Asset Management - The company’s total loans increased to $60 billion, up 10% from the previous quarter, driven by strong demand in automotive finance[1]. - Total assets at the end of Q3 2024 were $192,981 million, a slight increase of $450 million from Q2 2024[7]. - Consumer loans decreased to $103,095 million, down 490 million from Q2 2024[7]. - Total finance receivables and loans, net decreased to $133,801 million in Q3 2023, down from $135,211 million in Q2 2023, a decline of $1,410 million[9]. - Total assets decreased to $192,085 million in Q3 2024, down from $195,360 million in Q3 2023, representing a decline of $3,275 million[10]. Revenue and Expenses - Net financing revenue for Q3 2024 was $1,488 million, a decrease of 7% compared to Q3 2023[7]. - Other revenue increased significantly to $615 million in Q3 2024, up 110% from Q2 2024 and 180% from Q3 2023[7]. - Noninterest expense decreased to $1,225 million, down 5% from $1,286 million in the previous quarter[8]. - Total noninterest expense was $616 million, a slight decrease of $1 million or 0.2% compared to Q2 2024[12]. Capital and Liquidity - Ally Financial's liquidity position remains strong, with total deposits reaching $40 billion, a 5% increase from the previous quarter[1]. - The company is committed to maintaining a disciplined capital allocation strategy, with plans to return $200 million to shareholders through dividends and share repurchases in 2024[1]. - Total current available liquidity reached $67.9 billion in Q3 2024, up from $64.3 billion in Q2 2024, reflecting a growth of 5.6%[22]. - Common Equity Tier 1 (CET1) capital ratio stood at 9.8%, up from 9.6% in Q2 2024[7]. Credit Quality and Loss Provisions - Provision for credit losses rose to $645 million, an increase of 188% from Q2 2024 and 137% from Q3 2023[7]. - The allowance for loan losses increased to $(3,700) million in Q3 2023, compared to $(3,572) million in Q2 2023, an increase of $(128) million[9]. - The percentage of loans 30+ days delinquent decreased to 5.4% in Q3 2024 from 6.1% in Q2 2024, indicating improved loan performance[25]. Strategic Initiatives - Ally Financial plans to expand its mortgage finance segment, targeting a 20% growth in originations by the end of 2025[1]. - The company is pursuing strategic partnerships to enhance its product offerings, with a focus on technology-driven solutions[1]. - The company plans to continue focusing on market expansion and new product development to drive future growth[26]. Operational Efficiency - The efficiency ratio improved to 58.3%, down from 64.3% in Q2 2024[7]. - Adjusted efficiency ratio improved to 52.1%, down from 53.2% in the previous quarter, indicating enhanced operational efficiency[31].

Core Viewpoint - Ally Financial Inc. reported its third quarter 2024 results, highlighting its performance and future outlook [1]. Group 1: Company Overview - Ally Financial Inc. is a financial services company with the largest all-digital bank in the nation and a leading auto financing business [3]. - The company serves approximately 11 million customers through a comprehensive range of online banking services, including deposits, mortgage, and credit card products, as well as securities brokerage and investment advisory services [3]. Group 2: Conference Call Information - A conference call will be held at 9 a.m. ET to review the company's performance, including a results overview and a question and answer session [1]. - Participation in the conference call is available via webcast or dial-in, with pre-registration required for dial-in access [2].

Group 1 - Ally Financial Inc. (ALLY) is a digital financial-services company with a Zacks Consensus Estimate for its current year earnings revised downward by 21.9% over the last 60 days [1] - ArcBest Corporation (ARCB) is a freight transportation and integrated logistics services company, experiencing a 5.6% downward revision in its current year earnings estimate over the last 60 days [1] - The Boeing Company (BA), the largest aerospace company in the world, has seen its current year earnings estimate revised downward by 142.5% over the last 60 days [1]

Core Viewpoint - Ally Financial is expected to report disappointing third-quarter results, with earnings estimates revised downwards due to increased provisions for loan losses and declining net financing revenues [1][9][17]. Financial Performance - Ally Financial's second-quarter performance showed a 5% year-over-year decline in net financing revenues, primarily due to higher funding and deposit costs [1]. - The consensus estimate for third-quarter earnings is 55 cents, reflecting a 33.7% decrease from the same quarter last year [1]. - The expected net financing revenues for the third quarter are pegged at $1.5 billion, indicating a 1.8% year-over-year decline [5]. Revenue Estimates - The consensus estimate for total sales is $2.06 billion, suggesting a 4.8% growth [4]. - Other revenues, including insurance premiums and service revenues, are estimated to rise by 7.6% to $344.4 million [6]. - The net gain on mortgage and automotive loans is expected to surge by 42.8% to $5.7 million [6]. Expense Trends - Non-interest expenses are projected to rise by 5% year-over-year to $1.29 billion, driven by ongoing product launches and expansion efforts [7]. Asset Quality Concerns - The asset quality of Ally Financial is expected to deteriorate, with increased delinquencies and net charge-offs in the retail auto loan segment [7][8]. - The provision for loan losses is anticipated to increase by 16% year-over-year to $589.2 million [9]. Market Position and Valuation - Ally Financial's stock has declined by 10.2% in the third quarter, contrasting with a 6.2% increase in the industry [11]. - The stock is currently trading at a price-to-tangible book ratio of 0.94X, below the industry average of 1.28X [12]. Strategic Outlook - The company is diversifying into other businesses, including mortgage and wealth management, and has launched an AI platform to enhance operations [15]. - Despite potential benefits from lower interest rates, the current economic challenges and deteriorating asset quality pose significant risks to profitability [16][17].

Core Viewpoint - Analysts forecast a decline in Ally Financial's quarterly earnings per share (EPS) by 33.7% year-over-year, with an expected EPS of $0.55, while revenues are anticipated to increase by 4.8% to $2.06 billion [1] Earnings Estimates - The consensus EPS estimate has been revised downward by 14.8% over the past 30 days, indicating a reassessment by analysts [1] - The 'Gain on mortgage and automotive loans, net' is projected to reach $5.71 million, reflecting a year-over-year increase of 42.8% [2] - 'Net financing revenue' is expected to be $1.51 billion, showing a decrease of 1.8% from the previous year [2] - 'Total other revenue' is forecasted to be $552.07 million, indicating a year-over-year increase of 26.9% [2] Revenue and Income Metrics - 'Insurance premiums and service revenue earned' is estimated at $344.37 million, representing a year-over-year increase of 7.6% [3] - 'Total financing revenue and other interest income' is projected to be $3.61 billion, reflecting a slight increase of 0.5% from the previous year [3] - 'Other income, net of losses' is expected to be $158.44 million, indicating a year-over-year increase of 4.2% [3] Financial Ratios and Asset Metrics - The consensus estimate for 'Net interest margin (as reported)' is 3.3%, up from 3.2% in the same quarter last year [3] - The 'Efficiency Ratio' is expected to be 58.5%, improved from 62.6% in the same quarter last year [3] - 'Total interest-earning assets (Average Balances)' are projected to be $183.70 billion, down from $187.92 billion year-over-year [4] - 'Non-performing loans (NPLs)' are expected to be $1.23 billion, a decrease from $1.50 billion in the previous year [4] - The 'Total Capital Ratio' is projected at 12.6%, slightly up from 12.5% year-over-year [4] - 'Tier 1 Capital Ratio' is expected to be 10.9%, compared to 10.7% in the same quarter last year [4] Stock Performance - Ally Financial shares have increased by 8.4% over the past month, outperforming the Zacks S&P 500 composite's increase of 4.3% [4]