Almost $20 trillion in revenue—and a record-breaking $1.87 trillion in profits. Introducing the 2025 Fortune 500, the definitive list of the biggest companies in America.

Fortune 500

The top companies on our list have one thing in common: Staff largely trust leadership to see them as well-rounded people and reward them for a job well done.

GPTW_100BestCompaniesToWorkFor_2025-Ally Financial Inc._US1__20241210214006_1

Employees say: "One of the things that is unique to Ally is its ownership mentality. Everyone here, regardless of level, are owners, and that makes a big difference in terms of the level of care each employee brings."

Fortune 100 Best Companies to Work For

The 300 companies on this year’s list brought in over $12.6 trillion in revenue for the latest 12 months, with the median revenue figure at $22 billion.

America's Most Innovative Companies

See which workplaces made this year's list.

GPTW_Financial_Services_and_Insurance_Large_2024-Ally Financial Inc._US1__20240712182200_3

Employees say:"It's important to me that I work for a place that supports local community and Ally does that. I feel proud to tell others I work there because they are a large part of the Charlotte community and support many different organizations."

Best Large Workplaces in Financial Services and Insurance

Industries included in the sector are banks, insurance, and real estate companies.

Fortune Sector Leaders: Financials

The Fortune 500, in its 70th year in 2024, ranks the biggest U.S. companies by revenue.

Creating a more empathetic workplace looks like staying loyal to workers, emphasizing D&I initiatives, and paying well.

100 Best Companies 2024-Ally Financial Inc.

Ally Financial, a financial services company with the country’s largest all-digital bank and an auto financing business, was not immune from inflationary forces in autos and struggles with electric vehicle sales, as it slashed <a href="https://www.charlotteobserver.com/news/business/article280772820.html">5% of its workforce</a> in October. That followed the company raising its minimum wage to $23 in the fall of 2022, which was the second increase in the span of about a year. In January 2023, Ally began including pay ranges on job postings. In 2020, Ally launched its #OwnIt equity grant program, and it has now issued over 4 million shares to employees since its inception. Ally committed nearly $1 billion to affordable housing organizations in 2023, which includes investments, grants, and loans. Starting in 2021 and continuing through 2023, Ally gave $2 million in unrestricted grants and sponsorships to 16 minority-led nonprofits across Detroit and Charlotte through its Trust-Based Philanthropy program.

The 200 companies on this list are transforming industries from the inside out.

Building a culture of trust and transparency is essential to help everyone thrive, especially in rocky economic times.

100 BEST COMPANIES 2023-Ally Financial Inc.

The digital financial services company joins the Best Companies list for the first time in 2023. 
<ul> 
 	<li>In 2022, the Ally Charitable Foundation made a pledge of $5 million over five years to the Atrium Health Foundation to help support those from underrepresented backgrounds pursue careers in health care.</li> 
 	<li>This past year, the company followed through on its commitment to provide access to capital for Black and Hispanic communities by granting $33 million in loans and investments to minority and women-led organizations, including the 22 Fund, BetaBoom, and Raza Development Fund.</li> 
 	<li>Ally offers its workers eight hours of paid time off for volunteering each year, and in total employees gave more than 28,000 hours of volunteer work in 2022. Ally will also match up to $1,000 in personal donations from each employee to eligible non-profit.</li> 
 	<li>94% of employees feel good about the ways they “contribute to the community.”</li> 
 	<li>In 2023, Ally expanded its mental health coverage. Now every employee, their dependents, and household members can access up to 16 free counseling sessions with a therapist per person annually, regardless of their enrollment in an Ally medical plan.</li> 
</ul>

The 300 companies on this list are transforming industries from the inside out.

GPTW Financial Services & Insurance Large 2023-Ally Financial Inc

Employees say: 
 
"This is truly a people-first company that treats its employees as owners and rewards as such. Ally Financial celebrates diversity, equity, and inclusion and strives to have all employees make a difference in their community outside of their working roles."

The Fortune 500, in its 69th year in 2023, ranks the biggest U.S. companies by revenue.

GPTW Financial Services Industry Large 2022-Ally Financial Inc.

Employees say: 
 
“Ally overall is a great company to work for primarily because of the people that work there and the executives at the top. The culture at Ally is very inclusive and provides ample opportunity to give back to the community. The benefits and fair pay also make this a wonderful place to work.”

To determine millennials' workplace preferences, Fortune's research partner Great Place to Work analyzed feedback representing more than 6.1 million U.S. employees.

GPTW 2022 Millennials List Large-Ally Financial Inc.

100 Best Large Workplaces for Millennials

This year’s Fortune 500 marks the 68th running of the list.

This year’s Fortune 500 marks the 67th running of the list.

Ally is one of the largest car finance companies in the U.S., providing financing and leasing for 4.5 million customers annually. The company also has an online bank, Ally Bank, and offers home loans and securities-brokerage and investment advisory services under the name Ally Invest. The stock has produced an average return of 16% over the past five years.

This year's Fortune 500 marks the 66th running of the list.

F500-2020-273-Ally-Financial

The Detroit-based financial services company offers online banking, investing, auto finance services, and home loans.

This year's Fortune 500 marks the 65th running of the list.

This year's Fortune 500 marks the 64th running of the list.

This year's Fortune 500 marks the 63rd running of the list.

This year's Fortune 500 marks the 62nd running of the list.

This year's Fortune 500 marks the 61st running of the list. Wal-Mart claims the top spot again. See who made the list.

Wal-Mart stayed on top as its sales crept closer to half-a-trillion dollars. Apple moved into the top five. And UnitedHealth Group continued its steady climb. 

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Best Workplaces In Financial Services And Insurance

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Ally Financial is a leading digital financial service and began operations in 1919 as GMAC, a lending arm of General Motors. It then rebranded to its current name in 2010 in the wake of the financial crisis. Ally’s major divisions include dealer services, corporate finance, insurance, and digital banking. In early 2025, it began winding down its mortgage operations. Its dealer services segment is the nation’s largest bank auto finance operation, and overall Ally Bank is the largest all-digital bank in the U.S.

Q2 2025

Q1 2025

Q4 2024

Ally Financial (ALLY): Company Profile, Stock Price, News, Rankings

legacy

Ally Financial

ally financial

Good day and thank you for standing by. Welcome to the 4th Quarter 2024 Ally Financial Earnings Conference Call. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question and answer session. Please be advised that today's conference is being recorded.

I would now like to hand the conference over to your speaker today, Sean Leary, Head of Investor Relations. Please go ahead.

Thank you, Daniel. Good morning, and welcome to Ally Financial's 4th quarter and full year 2024 earnings call. This morning, our CEO, Michael Rhodes and our CFO, Russ Hutchinson, will review Ally's results before taking questions. The presentation we'll reference can be found on the Investor Relations section of our website, ally.com. Forward looking statements and risk factor language governing today's call are on Slide 2.

GAAP and non GAAP measures pertaining to our operating performance and capital results are on Slides 34. As a reminder, non GAAP or core metrics are supplemental to and not a substitute for U. S. GAAP measures. Please note that the company made a change in our accounting methodology for electric vehicle tax credits as previewed in recent quarters.

Figures for 2023 2024 presented under the new deferral method of accounting. For certain metrics, we've shown results under both deferral and the prior flow through methodology. Definitions and reconciliations can be found in the appendix. And with that, I'll turn

Thank you, Sean. Good morning, everyone, and thank you for joining the call. Before we begin, I want to take a moment to acknowledge the devastating wildfires in Los Angeles as our thoughts are with those facing such a tremendous loss. Now while it's challenging to shift gears from such a heavy topic, let's move forward with our results starting on page 5.

In 2024, Ally delivered adjusted EPS of $2.35 core pretax income of $1,000,000,000 and revenues of $8,200,000,000 We are pleased with momentum across the businesses entering 2025. After a year in which our financial results were pressured from a combination of volatile interest rates and a consumer burdened by the cumulative effects of inflation. 4th quarter results were in line with or favorable to the updated guidance we provided in October. The team's collective efforts enable us to reinforce our market leading positions and strengthen our foundation for the years ahead. As I reflect on my 1st 8 months as CEO, I'm filled with a profound sense of gratitude and optimism.

I remain particularly encouraged by the strength of our core franchises. We're poised to deliver growth and shareholder value through consistent execution in dealer financial services, corporate finance and deposits. The strength and durability of our competitive advantage of those businesses are enhanced by our brand and culture. The Ally brand has a powerful connection with consumers, anchored in a history of always doing the right thing. For the 3rd year in a row, we were recognized by Fast Company as a brand that matters.

We're the only financial services brand to achieve this consecutive distinction, proving again that we have one of the most relevant and differentiated brands in banking. When I started as CEO, one of my first priorities was to keep our people first culture and do it right approach at the heart of everything we do. I believe it's one of the many things that truly sets Ally apart. In 2024, we ranked in the top 10% of companies for employee engagement for the 5th consecutive year, 7 points higher than the financial services benchmark. When employees are all in, our culture thrives and our customers benefit.

Our commitment extends beyond customers and into the communities where we live and work. In 2024, we continue to drive economic mobility through financial education, affordable housing and workforce preparedness. Our Community Reinvestment Act has earned 3 consecutive outstanding ratings, a designation achieved by fewer than 15% of banks. Going forward, we'll continue to lead into our do it right approach, investing in our employee and customer experience and making a positive impact in our communities. As many of you may have heard me say before, I spent the 1st few months in my role listening and learning.

I developed a greater appreciation for Allied's legacy during these months. And as we prepare to launch the next chapter of this company's evolution, I believe we are best positioned to deliver compelling returns and grow shareholder value through the power of focus in our core franchises. Continuing to win in dealer financial services, corporate finance and deposits will be our focus going forward. More on this in a moment. Let's turn to Page 6 to talk about the quarter.

Since becoming CEO, I've been evaluating all aspects of our business to identify opportunities to be even better. Building on Ally's solid foundation and position the company for long term success is my top priority. To that end, we have taken a number of significant steps this quarter. Now I recognize there are lots of moving pieces. However, these actions simplify and streamline the company, prioritize our resources towards our core franchises and improve financial returns and transparency.

This morning, we announced that we reached an agreement to sell our credit card business. As I said before, card is great business and we have

team. However, I believe our path to deliver mid teens returns is through the power of focus. Similarly, we are ceasing new mortgage loan originations on January 31st and expect remaining balances to run off over time. The mortgage portfolio today yields just over 3%. As it runs off, we are positioned to invest in higher yielding asset classes driving NIM expansion.

Beyond these actions, we've taken steps to manage controllable expenses in 2025. During the quarter, we announced a workforce reduction, which resulted in recognition of a $22,000,000 restructuring charge. While it's not something we take lightly, this action is expected to contribute more than $60,000,000 in annualized savings, drive positive operating leverage and align the cost structure with our new streamlined footprint. We see tremendous opportunity in the businesses where we have demonstrated competitive advantage, attractive returns and the scale necessary to succeed. Shifting gears a bit, we had a few reporting related updates worth mentioning.

As Son mentioned earlier, we have changed the deferral method of accounting for EV lease tax credits. This change was made retroactively and reduced retained earnings by approximately $300,000,000 and CET1 by 20 basis points. Importantly, the impact of capital is net neutral in the medium term as the day 1 impact is earned back over the next few years to net interest income. In alignment with a more simplified Ally, we've also made updates to the corporate expense allocations and reporting segments. These changes are intended to provide greater transparency to investors, consistency in various allocations and align with how we manage and evaluate dealer financial services, corporate finance and deposits.

Russ will cover these changes in more detail shortly. Let's turn to Page 7 to discuss our market leading franchises. Within auto finance, consumer originations of $39,000,000,000 were sourced from a record 14,600,000 applications, again showcasing the strength of our mutually beneficial dealer relationships and the scale of our franchise. Origination yields of 10.4% were driven by strong application flow that allows dynamic and selective underwriting. 44% of our originations were made of the highest credit quality tier, positioning us for strong risk adjusted returns in the years ahead.

We remain committed to the success of our more than 20,000 dealers and I'm encouraged by the trends we're seeing in application flow to further strengthen and grow our position as the leading bank auto finance lender in the country. Insurance written premiums of $1,500,000,000 were the highest since our IPO as we benefited from new relationships, growth in inventory exposure and synergies with our auto finance team. Corporate Finance delivered record pre tax income of more than $400,000,000 and an ROE of 37% with 0 net charge offs, demonstrating the quality of our loan book. This was a uniquely strong year in the Corporate Finance business. While we expect some normalization of credit in the near term, I'm quite confident the team will continue to deliver accretive returns while prudently managing risk.

Our deposits franchise had another fantastic year. We've continued to invest to deliver best in class digital features and products, growing the customer value proposition beyond rate. And we added more than 230,000 new customers and now serve 3,300,000 depositors with $143,000,000,000 in balances. Deposit balances were up $1,000,000,000 year over year, very consistent with our outlook in January and well aligned with what's needed to support the asset side of our balance sheet. Customer satisfaction of 90% and retention above 95% continue to lead the industry.

In 2024, we grew Engage Savers, saving customers that leverage multiple core products and features by nearly 15%. Since 2019, we've increased Engage Savers from $300,000 to $1,300,000 Engage Savers now represent nearly 40% of the customer base and are generally less rate sensitive than our other depositors. Our culture of customer obsession has strengthened our deposit franchise, enabled profitable growth in auto, insurance and the corporate finance business. We are pivoting to a more focused approach that allocates capital to our core businesses where we have competitive advantage, it prioritizes efficiency and expense discipline and prudently manages risk. I am confident this should translate to mid teens ROTCE over time.

And with that, I'll turn it over to Russ.

Thank you, Michael. Good morning, everyone. I'll begin on Slide 8. Before I get into the results, I'll expand on changes we've made to expense allocations in the reporting segments. As Michael mentioned, these changes are intended to align to how we manage and evaluate our businesses.

Our dealer financial services and corporate finance results now reflect 100% of our centralized functional costs. The business lines will no longer be allocated operating costs associated with the deposits platform. This better aligns with our approach to funds transfer pricing, which is primarily market based and match funds assets at origination. And mortgage finance results for the outstanding portfolio are now reflected in corporate and other. Also, as discussed last quarter, our net interest income and income tax expense now reflect the deferral method of accounting for EV lease tax credits.

Now let's review results. In the 4th quarter, net financing revenue excluding OID of $1,500,000,000 was in line with the prior year and prior quarter. We benefited from continued expansion in retail auto yields, excluding the impact of hedges and we benefited from the impact of lower deposit pricing, partially offset by lower yield on floating rate exposures quarter over quarter, reflecting the decrease in short term benchmark rates. Adjusted other revenue of $564,000,000 was up 13% year over year, reflecting broad based momentum. Full year adjusted other revenue was up 14%, higher than the 5% to 10% expectations set forth at the beginning of the year.

Other revenue streams including insurance, smart auction and consumer auto pass through programs continue to be a tailwind to fee revenue heading into 2025. Provision expense of $557,000,000 was down year over year driven by a few factors. 1, 0 net charge off activity in our commercial portfolios 2, lower consolidated net charge offs following the sale of our point of sale lending business early in the year 3, a modest quarter over quarter decline in retail auto coverage rate following an increase in the prior quarter. We will discuss retail auto net charge offs in more detail later. Non interest expense of $1,400,000,000 includes 2 one time items, a partial write down of goodwill related to the pending sale of the credit card business of $118,000,000 and a $22,000,000 restructuring charge associated with the reduction in force.

The headcount actions position us for $60,000,000 in annualized savings next year. One time expense items totaling $140,000,000 or $0.37 of EPS has been excluded from core pre tax results. This is consistent with our treatment of similar items in the past. Adjusted non interest expense was up less than 2% year over year, primarily driven by growth in insurance and FDIC fees. And controllable expenses were down more than 1%, demonstrating commitment to cost discipline that will continue going forward.

Our effective tax rate for the full year was 20%, reflecting the deferral method of accounting for EV tax lease credits. Our 0% tax rate within the quarter included impacts from prior state and international returns as well as standard year end true ups. GAAP and adjusted EPS for the quarter were $0.26 and $0.78 respectively. Moving to Slide 9. Net interest margin excluding OID of 3.33 percent increased 1 basis point from the prior quarter, resulting in full year NIM of 3.3%.

Expansion in retail auto yields, excluding the impact of hedges and decreasing deposit costs were partially offset by contractual repricing of floating rate exposures and lower lease gains. Cost of funds decreased 17 basis points quarter over quarter driven by a 22 basis point decrease in deposit costs. Deposit pricing has been in line with expectations during the quarter and we continue to expect a cumulative deposit beta of around 70% over time. We have good momentum on both sides of the Ally balance sheet from the multi year transformation of both our assets and liabilities. We continue to run off mortgage and securities balances with yields of approximately 3%, replacing them with retail auto and corporate finance loans, both currently yielding over 9%.

On the other side of the balance sheet, deposits as a percentage of funding have increased to 90% from 70% in 2019 and the spread between cost of funds and Fed funds has improved significantly. As we've successfully reached core funded status and enhanced the value proposition, we've been able to price our deposits favorably relative to our major competitors. Due to the improvement in spreads for both assets and liabilities, we're well positioned for margin expansion and sustainably higher NIM over the medium term. As Michael mentioned earlier, we have reached an agreement to sell our credit card business. Given the 20% plus yield on that book, a sale of the business impacts our medium term outlook for margin.

However, the benefits from lower credit costs and operating expenses provide a substantial offset to lower margins. Taken together, an exit from the card business does not have a material impact on core pretax income. There are many moving pieces that will impact our path to normalized margin, most notably changes in interest rates and market pricing for deposits, but we remain confident in the trajectory. Turning to Page 10, CET1 of 9.8% represents over $4,000,000,000 of excess capital above our SCB minimum. The sale of Allied credit card is expected to add 40 basis points of CET1 at closing and $1 of adjusted tangible book value per share.

We intend to redeploy that capital into a combination of growth in our core franchises, potential restructuring of the securities portfolio and eventually share repurchases. As we mentioned earlier, we booked a $118,000,000 goodwill impairment in 4Q related to the card business. We expect to book approximately $10,000,000 to $20,000,000 of additional one time transaction related expenses as we progress towards closing. Within the quarter, there were a couple of material moving pieces impacting capital. We issued our 2nd credit linked note generating 16 basis points of CET1 at the time of sale.

Demand was robust, leading to solid execution and demonstrating market appetite for the loans that were originating. And adoption of the deferral method of accounting for EV leases temporarily reduced CET1 by 20 basis points. Looking ahead, we'll continue to remain opportunistic with respect to growing capital and thoughtful about how we deploy excess capital over time. In the Q1 of 2025, we expect an approximately 20 basis point impact to CET1 from the final phase in of CECL. We recently announced our quarterly dividend of $0.30 for the Q1 of 2025, which remains consistent with the prior quarter.

Excluding the impacts of AOCI, adjusted tangible book value per share is $47 up more than 2 times from 2014. We remain focused on tangible book value per share growth in the years ahead and driving shareholder value through disciplined capital deployment. Let's turn to Slide 11 to review asset quality trends. The consolidated net charge off rate of 159 basis points was up 9 basis points quarter over quarter. We continue to see solid credit performance in our commercial portfolios in the 4th quarter, resulting in 0 net charge offs in 2024.

The year over year net charge off comparison includes $36,000,000 of Ally Lending activity in 4Q 2023. Full year consolidated NCOs finished within our range of 1.4% to 1.5% provided a year ago, driven by better than expected performance in our commercial portfolios. As we continue to be further removed from the unprecedented effects of the pandemic, including historically high inflation, we're seeing improving trends in consumer performance. Retail auto net charge offs of 2 34 basis points were up 10 basis points quarter over quarter. Typically, we would expect approximately 35 basis points of quarter over quarter increase tied to seasonality.

Total loss rates were favorable in the quarter and were well below 2019 levels all year, reflecting a dynamic approach to collection strategy that's been effective at keeping consumers in their vehicles and reducing losses. We also had a strong Q4 for recoveries given the strength in used vehicle values relative to our expectations. In the Q4, we outperformed typical seasonality as procurement actions, auction price stability and easing inflation pressure increasingly benefited portfolio results. In terms of trends we saw throughout the quarter, we saw stabilization of trends early in the quarter and we ended with a strong finish in December. We closed the year with historically low global loss rates and with a stable used vehicle value backdrop that led to results better than expectations heading into December.

Credit performance throughout 2024 was choppy. We certainly expect to benefit from portfolio turnover in 2025, but we acknowledge the macro environment remains uncertain. In the bottom right, 30 plus day accruing delinquencies increased 15 basis points quarter over quarter and were down 3 basis points year over year. Late stage delinquencies remain a key watch item. Given the increase in non accrual loans we've been discussing throughout the year, we've enhanced our disclosure this quarter.

We continue to show delinquency for the accruing only population, but have added the corresponding 30 day DQ metric for the total portfolio, which includes both accruing and non accruing loans. We believe both are helpful to investors and the total portfolio view aligns with how we manage the business from an operational and loss mitigation perspective. On Slide 12, let's discuss the retail auto vintage credit trends. Actual and expected portfolio mix as well as loss contribution by vintage are shown on the top half of the page. As we've discussed previously, the 2022 vintage is producing elevated losses relative to expectations at the time of origination across the consumer finance space.

Ally's 2022 vintage comprised roughly 40% of portfolio losses in 2024 as the vintage worked through peak loss seasoning. As the portfolio continues to turn over, the 2022 vintage will amortize down. That vintage is expected to comprise 10% of our retail auto portfolio by year end 2025 compared to 20% at year end 2024. Vintage delinquency trends are on the bottom left. Our 2023 vintage continues to outperform 2022 after equivalent months on book.

We remain encouraged by the early trends in the 2024 vintage, which is outperforming the 2023 vintage after 12 months on book. The table on the bottom right highlights improvement in credit profile, which has resulted from the curtailment actions we've taken. We expect these curtailment actions to mitigate losses in future periods and drive strong risk adjusted returns. Credit trends have improved recently and give us confidence in our path to normalize net charge offs below 2%. We continue to carry an elevated population of late stage delinquent accounts, which makes it difficult to provide precise timing and point estimates, but we remain confident that our curtailment actions and a constructive macro position us for lower losses over time.

Moving to Slide 13, consolidated coverage increased 4 basis points and retail auto coverage decreased 2 basis points. The increase in consolidated coverage rates were largely driven by lower balances in commercial auto and corporate finance. The decrease in the retail auto coverage rate was driven by a partial release of the hurricane reserve recorded in the prior quarter. Moving to Slide 14 to review auto segment highlights. Pretax income of $397,000,000 was lower year over year, primarily driven by lower lease revenue and gains, slightly lower average earning assets and higher servicing related expenses.

On the bottom left, we highlighted the trajectory of retail auto portfolio yields. Excluding the impact from hedges, yields were up 10 basis points quarter over quarter and 66 basis points year over year. 4th quarter originated yield of 9.6% was down quarter over quarter, driven by a decrease in benchmark rates and an increase in ST originations from 43% to 49%. While the Q4 usually drives an uptick in credit quality, our capture rates in Super Prime were above our expectations for much of the quarter. We're pleased with the return profile of what we originated, but have taken action on the pricing side that will result in lower S tier in the Q1.

We've already seen the impact of this with our originations mix exiting the year closer to what we originated for most of 2024. And as we've mentioned before, we expect to gradually unwind curtailment action over time to a more normalized mix. The unwind of curtailment actions will partially offset benchmark rate driven price decreases over the long term. The timing of curtailment unwind remains fluid and will be informed by front book portfolio performance, which has begun to show signs of improvement. Lease trends are in the bottom right.

Gains of $3,000,000 in the 4th quarter reflect lower lease termination volume quarter over quarter and softer lease gains per vehicle driven by vehicle termination mix. We expect lease gains to remain low in the Q1 and increase modestly in the spring and summer due to typical seasonality as well as vehicle termination mix. Turning to insurance on Slide 15. Corp pretax income was up $25,000,000 year over year driven by higher earned premiums. Total written premiums of $390,000,000 reflect the continued momentum of business trends in P and C and F and I products.

Growth in P and C written premiums of $40,000,000 year over year are supported by new OEM relationships and recovering inventory levels. Insurance losses of $116,000,000 up $23,000,000 year over year are in line with expectations and are more than offset by higher revenues. Insurance was a key driver of our fee revenue expansion in 2024 and we remain encouraged by the opportunity to grow this business over time by leveraging synergies with our auto finance business. Corporate finance results are on Slide 16. Core pre tax income of $120,000,000 demonstrated another strong quarter for corporate finance.

While not shown on the page, corporate finance surpassed $400,000,000 of earnings in 2024, a record in the 25 year history of business. End of period HFI loans of $9,600,000,000 are well diversified in virtually all first lien, and we remain well positioned from a credit standpoint. On the bottom of the page, we highlight the accretive return profile of the Corporate Finance business. 2024 performance was in part due to exceptionally strong credit performance resulting in 0 net charge offs for the year. We expect NCO performance to normalize and are confident the business will continue to drive solid returns.

Corporate Finance remains an attractive business for prudent growth. I will provide an update on our 2025 outlook on Slide 17. We've shown 2025 assuming credit card operations for a full year largely for comparability purposes with 2024. We expect the sale of the card business to close in the 2nd quarter and are providing a 2025 pro form a that assumes a sale on April 1. We expect 2025 NIM of approximately 3.4% to 3.5%.

Given the 20% yields on credit card receivables, the sale of Ally Credit Card has impacted our near term NIM outlook by approximately 15 basis points. That would be approximately 20 basis points on an annualized basis. Importantly, the impact of NIM is offset by lower credit costs and expenses and our medium term outlook for mid teens ROTCE remains unchanged. The range for NIM reflects the uncertain impact of interest rates and deposit competition. Margin should be flat plus or minus in the Q1 as we recognize the full quarter impact of 4Q rate cuts on floating rate exposures.

We expect to position ourselves competitively during the Q1 to capture incremental money in motion as deposit availability generally increases due to tax refunds, year end payouts and changes in consumer behavior. Importantly, we see margin exiting 2025 higher than the full year guide given our starting point and a stable 1Q margin. We expect continued momentum in insurance, smart auction and auto pass through programs to increase other revenue. However, other revenue is expected to be flat year over year as we will see lower fee revenue from the credit card business following its sale. In terms of credit, we see retail auto net charge offs of 2% to 2.25%.

We are exiting the year under favorable conditions, which led to outperformance on both frequency and severity. On the frequency side, while we entered the Q4 with elevated levels of delinquency, the collections enhancements implemented within our servicing organization are working. These loss mitigation strategies are keeping people in their vehicles and we exited the year with historically low flow to loss rates. Additionally, our newer vintages are performing better than assumed. With respect to severity, used vehicle prices were approximately 4% better than what we assumed in our October update.

Turning to expectations for 2025. Our range reflects that we are still operating through an uncertain macroeconomic environment and that we continue to carry elevated levels of late stage delinquency. It also takes into consideration the vintage dynamics, which are an important catalyst that gives us confidence that we are structurally headed to losses normalizing lower. Midpoint of the range assumes a slight increase in flow to loss rates coming off historic lows in the 4th quarter. If macroeconomic conditions deteriorate, we could see delinquencies increase, photo loss rates worsen or used vehicle value soften beyond our current expectations.

Any degradation in conditions or if our servicing strategies become less effective, our losses could migrate higher than the midpoint. Conversely, we see a path to lower than midpoint assuming delinquency stabilize 4Q, so the loss rates hold or improve further or used vehicle values continue to outperform expectations. In closing on retail auto credit, it's important to note that monthly and quarterly variations will continue, but we remain highly confident in what we see as a trend normalizing lower. Transitioning to consolidated NCOs. Despite the pressure we saw in retail auto last year, our consolidated loss rate of 1.48% in 2024 was in line with the original guidance we provided last January, as we saw uniquely strong performance across the entire commercial loan portfolio.

While we feel great about the state of those portfolios, our full year guidance does assume a return to more normalized losses. We see expense growth flat in 2025, including the impact of exiting the credit card business. Increases in areas directly contributing to revenue generation and managing losses are offset by expense savings from the sale of the credit card business and headcount actions that we mentioned earlier. As you all know, the Q1 always had seasonal compensation items, so we expect linked quarter expenses to be up 6% to 7%, which would put them in line with prior year. Our outlook for revenue expansion and tightly managed expenses positions us for positive operating level in 2025 and over the medium term.

Earning assets are expected to be flat on average year over year. Importantly, the favorable asset mix shift underpinning relatively flat earning assets will be a tailwind to margin in 2025 and the medium term. Given the accounting change to deferral method, we're estimating a normalized tax rate of 22% to 23%. I've mentioned a few things related to Q1, including relatively stable NIM, seasonal compensation items and of course 2 fewer days in the quarter. We feel good about our earnings trajectory heading into 2026.

Before I turn it over to Michael, I want to reiterate my confidence in our mid teens ROE outlook. Our path to mid teens returns is predicated on 3 primary drivers that remain unchanged. 1st, margin expansion. As we've covered, we're well positioned in various interest rate scenarios driven by underlying business trends in auto, corporate finance and deposits. 2nd, normalization of retail auto NCOs to below 2%, which implies a consolidated net loss rate of approximately 1.3%, which is about 15 basis points lower than it would be with card.

The trends we saw in the 4th quarter driven by our actions to curtail risk further increases my confidence in losses improving over time. Finally, our commitment to disciplined resource allocation in terms of expenses and capital, which is firm. The exact timing of when we achieve our return targets will be driven by a number of factors. However, we remain confident in our ability to execute against our plan and drive long term shareholder value. And with that, I'll turn it back to Michael.

Well, thank you, Russ. Before we wrap up, I believe it's important to highlight the progress we've made as a publicly traded company. Last month, we celebrated the 10 year anniversary of our IPO at the New York Stock Exchange, where our team had the pleasure of ringing the opening bell. It gave me the opportunity to reflect in our legacy and how far we've come as an organization. Our do it right culture spans all layers of the organization and serves as the foundation of our success.

We've built a valuable nationally recognized brand centered on being a relentless ally for our customers. And over the years, we've transformed both sides of the balance sheet to make us a structurally more profitable company. Since we launched Ally Bank 15 years ago, we've grown to be the largest all digital U. S. Direct bank serving more than 3,000,000 customers and over $140,000,000,000 of retail deposits.

We were at the forefront of the shift in consumer preferences towards the digital banking and we firmly establish a reputation as a leading innovative digital bank that offers compelling rates, best in class digital experiences and exceptional service. The dealer financial services business has transformed from a captive auto finance company to a leading full service independent auto lender, offering a wide range of products and services to more than 20,000 dealers. We've established ourselves as a full spectrum franchise with superior scale, technology and deeply entrenched relationships with dealers across nearly all OEMs, while continuing to partner with those who are driving the evolution at the auto industry. Corporate Finance has a 25 year proven track record, has navigated multiple business and credit cycles. As we look ahead, I remain incredibly excited about the future of Ally.

We are pursuing a more focused approach in our core businesses where we have demonstrated competitive advantages, dealer financial services, corporate finance and deposits. We are pivoting to increase focus on a few core businesses that have durable and diversified revenue streams, attractive returns and relevant scale. Dealer Financial Services, Insurance, Smart Auction and our consumer auto pass through programs have been increasing fee revenue, which now exceeds $2,000,000,000 per year, up more than 50% since 2014. Corporate Finance's held for investment portfolio has grown to $10,000,000,000 from roughly $5,000,000,000 in 2019. I believe the power of focus in our core business will increase efficiency, reduce complexity and risk and align our resources to the opportunities that drive the most value for our stakeholders.

As we launch the next chapter of Ally's evolution, we will ensure our culture remains aligned with our relentless focus on customers, communities, employees and shareholders. We will strive to be one of the most relevant and creatively disruptive brands in banking. We will invest in technology that powers dealer and customer centric products and services. And most importantly, we expect this focus will improve financial results to deliver compelling returns. And with that, I'll turn it over to Sean for Q and A.

As we head into Q and A, we do ask that participants limit yourself to one question and one follow-up. Daniel, please begin the Q and A.

And our first question comes from Ryan Nash with Goldman Sachs. Your line is open.

So Russ, maybe to start on credit. You highlighted the better than expected performance in the quarter due to a handful of items like recoveries, flow to loss. And if I think about the Q4 loss rate, it feels like you're at or slightly below a 2% seasonally adjusted loss rate. When I look at the slides, Slide 12, you show the problem vintages are becoming smaller, the new ones are outperforming. You've continued to move up in S Tier.

So I guess my question is, given the guide of 2% to 2.25%, just how do you see and I know you gave a lot of color when you were going through them, but how do you see losses progressing? And could we actually exit the year at a level that is below that 2% seasonally adjusted loss rate?

Great. Thanks Ryan for the question. I appreciate that. And as you know, as you've seen our outlook in credit has been choppy throughout the year. And I'd say your observations on 4th quarter are mostly correct.

We saw favorable flow to loss trends. We saw favorability and severity. And as you pointed out, we started the quarter with elevated levels of delinquency as we've been running at elevated levels of delinquency throughout 2024. When you kind of look at the seasonality, you're right, we saw improvement in what we would call the seasonally adjusted annualized loss rate in the quarter. I'd still characterize it as north of 2%, where I think you'd said it was 2% or below.

So it's probably not quite as good as you implied, but certainly favorable, certainly favorable to what we were seeing in the 3rd quarter, where we had highlighted NCOs that were running 10 basis points above our expectations and delinquencies that were running 20 basis points above our expectations based on seasonality and portfolio turnover. As I look forward, we've given the range of 2% to 2.25% on NCOs. And I'd say, as I think about that range, it's important to think about the context in terms of the elevated levels of delinquencies that we've been seeing as well as that favorability we saw in flow to loss in the quarter and on severity. And I'd say towards the midpoint of the range, we've assumed that there's some reversion on flow to loss rates. Obviously, we have good visibility into where we're starting the year in terms of delinquencies, but we've assumed some reversion, so some unfavorability in photo loss rates.

And we've assumed kind of more or less stable used car values supporting us on the severity side. Now as you think about the range either up or down, and maybe I'll start with some of the things that could affect us unfavorably on the downside. So to the extent that photo loss rates revert, for example, in the context of a macro that weakens or to the extent that our collections become our collections methods become less effective or in an environment where used car prices deteriorate. You could see either of those things kind of pushing us towards the high end. On the other hand, if we continue to see flow to loss rates like we saw in December or potentially even they continue their current path of improvement and used car prices remain constructive in the context of a favorable macro that could drive us towards the low end of the range that we've provided.

Got it. And then maybe as my follow-up, a 2 part question. Post the sale of the card business, I think you highlighted 40 basis points of capital. And even with CECL Day 1, it should put you above 10%. And I know in your remarks, Russ, you talked about a handful of potential uses growth and then you talked about potential securities restructuring.

So my first question, can you maybe just give more color in terms of like what the size and parameters of a restructuring could be? And then post the sale of the card, Russ, you talked about being positioned for sustainably higher NIM. Do you still believe Ally is a 4% NIM company? And what are the drivers to getting there? And if not, what do you think the more normal NIM of the company is?

Great. Thanks, Ryan. Maybe I'll start on capital. As we said before, our management target is a 9% CET1. There's some uncertainty around the regulatory environment, particularly around AOCI and how that's going to be treated going forward.

Given that uncertainty and given the volatility that the inclusion of AOCI would introduce to our CET1 levels, we've said that where we typically run at a 20 to 30 basis point buffer to that management target of 9%, we think that buffer needs to be fatter. And so just to give you a little bit of context and just in terms of kind of how we're currently thinking about capital. Certainly, the card sale is going to increase our flexibility around capital. And so as we think about that increased flexibility, our number one priority is investing in our core businesses. And as we've noted throughout the year, we're being really thoughtful and really disciplined around how we deploy capital to get to risk adjusted returns that are accretive to our business.

And so we're going to continue with that. Now aside from investing in the core businesses, we've talked about the possibility of some restructuring of the securities portfolio and eventually capital return through share repurchases. As you know Ally historically has used share repurchases as a way of returning capital and we look forward to getting back to that. And I'd say again, the capital flexibility that we've been building over the course of the last year, obviously from the card sale, from the lending sale, from the CRT transactions that we've been executing over the course of the year. All those things point to greater capital flexibility.

And look, as we evaluate the alternatives, we'll be very much focused on shareholder value and on what's going to drive us in terms of risk adjusted return, whether that is investing in the core business and looking at the risk adjusted return we can get there or it's looking at restructuring of the securities portfolio and looking at the NIM pickup and ultimately the payback that we can get from that activity. But you can expect a continuation of the capital discipline that we've been talking about all year long. On your 4% NIM, I guess your follow-up to your follow-up question. Look, I would say, look, the we're highly confident in our trajectory and nothing's changed in terms of dynamics on our balance sheet and in our businesses that point to NIM increasing over time. All that being said, as you pointed out, the sale of the card business will take about 15 basis points off of NIM this year, 20 basis points on an annualized basis.

But it's important to note that with that, we're also shedding expenses. And then our credit costs also come down. And so the net impact of credit card is a push from an earnings perspective. And so when you think about that we talked about that 4% NIM, 2% loss rate on retail auto, continued discipline around expenses and capital. In order to support a mid teens ROTCE, I would say the 4% NIM is no longer required to support that mid teens ROTCE.

It's somewhere in the high 3s. And so we're no longer banking on getting to that 4% NIM. All that being said, I wouldn't take 4% NIM off the page. It's certainly as you kind of think about the dynamics on our balance sheet even without card, it's certainly something that we could deliver. But we're not banking on it at this point.

I think something in the high 3s again with retail auto coming to 2% or lower on NCOs and continued discipline around capital and expenses. We think those things are adequate to support our mid teens ROTC aspirations going forward.

Thank you. Our next question comes from Sanjay Sakhrani with KBW. Your line is open.

Thank you. Good morning. I heard Russ, you talked about some of the movements in the originated yield this quarter and expecting to reprice higher. I'm just curious how much of this is just sort of the selection of consumers you're getting versus competition? I know like Capital One is coming back into the market, some other banks have talked about it.

Maybe you can just talk about the competitive dynamics?

Yes, sure. Yes, there was about a 90 basis point drop in originated yield going from 3Q to 4Q. And I'd say a chunk of that was benchmark rates and then a big chunk of that was actually mix. So you saw our S tier go from 43% to 49%. It's typical in the Q4 that we pick up more of the S tier.

It's just a seasonal trend that we see each year. But obviously, we picked up a lot more than we anticipated. And I would characterize that as we just got more volume that we closed in that S tier than we anticipated. And we mentioned earlier that we've made changes around our pricing late in the quarter. And so we think we've got that managed and we expect our mix to kind of return to more like what we saw over the full year 2024.

But that was that mix impact was certainly a factor. But importantly, if you look at how we price across the tiers, so comparing pricing on a more of a like for like basis, I'd say we're pretty pleased with our asset betas over the course of the quarter. And in fact, they're probably running favorable, quite frankly to our original expectations.

And you're not saying anything Sorry, Michael. Go ahead.

Sorry, Sanjay. I was just going to offer. I agree with everything, obviously, Russ said. And then just from a competitive perspective, it was an interesting dynamic between the 3rd and the 4th quarters, because in the 3rd quarter, we actually saw that our origination volume price is a little softer than what we expected. In the 4th quarter, we actually did quite well.

I'd actually say that we were pretty consistent in terms of our market approach during those two quarters, and the market just, I think, rewarded us nicely in the 4th quarter. One other dynamic that you have to kind of think about is the most recent data on new car sales has been pretty strong and see if that dynamic works in our favor as well.

Got it. And then just a follow-up question to the previous line of questioning. In terms of all these different moves that you made, I know, Russ, you kind of reiterated the mid teens ROTCE target. But as far as like timing, does that change anything? Because like obviously some of these NIM the NIM impacts from the EV credits are immediate and they come back over time.

I'm just curious as we think about timing of achieving them, does that push it out in any way? Thanks.

No, nothing's changed from our perspective on timing. I think with a lot of these moves, we have increased confidence and we certainly see the benefits of Focus in terms of our ability to drive to the outcomes that we desire in terms of credit, in terms of expense levels, in terms of kind of how we think about capital. So all of those things are positive. I'd say it doesn't change our view on timing. All that being said, we haven't given the Street any precise timing.

A lot of things outside of our control, including what happens with rates going forward, what happens in the macro that could affect the timing positively or negatively. The destination for us is clear in terms of where we're going. And all the changes that we've done, I think, gives us better ability to manage different changes in the macro and ultimately give you hopefully more confidence in our ability to get to that mid teens ROTC target in the medium term. But again, we haven't given a specific timing on that. Thank you.

Thank you. Our next question comes from Robert Waldat with Autonomous Research. Your line is open.

Good morning, guys. I wanted to unpack some

of your comments around unwinding curtailment actions. All else equal, I mean, how much of a benefit do you think that is to the originated yield? And then what's the primary driver behind that decision? Given some of the volatility around credit in the past, it sounds like you're still being reasonably conservative with respect to the macro going forward too. I wonder why not keep the pedal down on the S tier volume?

Ally Financial is a leading digital financial service and began operations in 1919 as GMAC, a lending arm of General Motors. It then rebranded to its current name in 2010 in the wake of the financial crisis. Ally’s major divisions include dealer services, corporate finance, insurance, and digital banking. In early 2025, it began winding down its mortgage operations. Its dealer services segment is the nation’s largest bank auto finance operation, and overall Ally Bank is the largest all-digital bank in the U.S.

Ally Financial Q4 2024 Earnings Call Transcript | Fortune

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Ally Financial (ALLY) Q4 2024 Earnings Call Transcript

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