Ally Financial Inc.

Good day and thank you for standing by. Welcome to the Ally Financial second quarter 2021 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star 0. I would now like to hand the conference over to your speaker today, Daniel Eller, Head of Investor Relations. Please go ahead.

Thank you, Operator. We appreciate everyone joining us to review Ally Financial's second quarter 2021 results. This morning, we have our CEO, Jeff Brown, and our CFO, Jen LeClair, on the call to review results and to take questions. Before beginning, I'll note the presentation we'll reference on today's call can be found on the Ally Investor Relations website. forward-looking statements and risk factor language governing today's calls on slide two. And on slide three, we've included several GAAP and non-GAAP or core measures pertaining to Ally's operating performance and capital results. These metrics are supplemental to and not a substitute for U.S. GAAP measures. Definitions and reconciliations can be found in the appendix. With that, I'll hand the call over to JB.

Thank you, Daniel. Good morning. We appreciate everyone joining us on the call today. Performance this quarter was exceptionally strong and our results underscore the power of our vibrant and growing businesses. Despite the rapidly changing operating environment over the past 18 months or so, we've executed against our strategic goals, expanding our market leading capabilities and driving momentum across all areas of the company. Do it right serves as our mantra and provides great clarity to our actions inside and outside the walls of Ally. I'm tremendously proud of how our Ally teammates uphold our values in meaningful ways every day. Since Ally Bank launched 12 years ago, you've seen us constantly challenge the status quo through innovative, seamless, and differentiated consumer bank products, services, and experiences. In June, we were the first major bank to announce the elimination of overdraft fees for all customers. While eliminating a revenue stream was viewed by many as unprecedented and by some as controversial, this was a logical step for us in continuing to redefine traditional bank norms and advancing our mission to create a better and more equitable banking relationship for everyone. The success of our all-digital banking platform is reflected in the accelerating growth across several measures, including sustained rapid expansion of engaged customers, industry-leading retention of balances and account holders, and steady growth over the past five years among customers who use multiple Ally Bank products. our model will continue to evolve to meet the increasing demand among consumers for frictionless and simplified experiences, enhancing our ability to further unlock additional franchise value in the years ahead. For our allied teammates, we remain relentlessly focused on fostering an engaged, equitable, and inclusive culture while prioritizing their well-being. We're encouraged by the reduction in COVID cases and growth of vaccinated populations across the nation, but obviously mindful of variants like Delta that are still presenting risks. At Ally, we recently announced our intention to begin welcoming our workforce back to the office after Labor Day, but pilot programs already underway today show that teammates were ready and excited to get back together. Our teammates across the company have gone to considerable lengths to balance the complexities involved in this environment, demonstrating a do-it-right approach in their thoughtful planning. I am incredibly proud, again, of how we have balanced doing right for our teammates and doing right for our company. On top of the great financial and operational results, this morning I'm pleased to announce a $50 million contribution to the Ally Charitable Foundation, a significant financial commitment toward driving lasting and positive change. Our foundation was active in the quarter, partnering with Habitat for Humanity of Charlotte to launch one of the largest affordable housing efforts to date, addressing a critical shortage in housing within historically black neighborhoods. We also increased our partnership with the University Growth Fund as they expanded in Atlanta. These efforts help college students from underrepresented groups gain real-world investment experience, including in areas like private equity. We're thrilled to support these and many other organizations in the important work they do to advance social and educational causes. The measure will progress we've made for our customers, employees, and communities is another source of pride for me, and I'm confident in the significant role these efforts have played in building a stronger company. Let's turn to slide number five, where I'll touch on a few highlights from 2Q. Second quarter adjusted EPS of $2.33, core ROTC of 26.7%, and revenues of $2.1 billion Each represented record-setting levels for Ally driven by organic revenue expansion and strong credit trends. While a favorable backdrop across consumer and auto markets accentuated financial results during the quarter, it's important to recognize the underlying drivers of Ally's broader performance. First, as you've heard from us on several occasions, Results of this magnitude reflect years of disciplined execution, and our adaptability and creativity has enhanced our ability to capitalize on market opportunities in real time. Second, and critically important, is that meaningful expansion opportunities remain ahead for Ally as we continue to grow our company and unlock incremental value within auto, insurance, and Ally Bank. These dynamics serve as the cornerstones of our long term operational and financial expansion, which we steadily delivered against over the past several years. Jen will provide more detail that we expect full year 2021 performance to exceed normalized returns, while our long term outlook for sustainable Our OTCE profile in the solid mid-teens represents our strongest level as a publicly traded company. Performance will be driven by ongoing core earnings expansion fueled by robust dealer engagement and deepened customer relationships across our digital bank offerings. Our continued progress allowed us to announce a 25% expansion to our share buyback program and increase our dividend for the sixth time in as many years. Disciplined capital management in accordance with the SCB regulatory framework is a continuous part of our focus. Turning to our business performance within Otto, consumer originations of $12.9 billion represented our highest level in 15 years at a solid 7.15% yield. we focused on being the preeminent dealer partner evidenced in the record 3.5 million applications we decision this quarter and with a pathway for further expansion as we deepen relationships across our 19,700 dealers. For the first time in our history, credit for the quarter was a net recovery reflecting the resilience of the auto asset class, including strong consumer demand, broad strength and health among consumers, including the benefits of meaningful fiscal and monetary actions, and our focused and modernized approach to underwriting and collections. Credit trends remain encouraging, reducing the likelihood of protracted elevated losses as a gradual migration back to more normalized levels becomes more likely over the next 12 to 18 months. Importantly, we use this time to further enhance our ability to reach our auto customers through expanded digital channels coupled with enhanced analytics within our servicing teams. We constantly monitor broader market indicators of consumer health, including wage and price inflation, employment conditions, and productivity measures. While there are several cross-currents today, I remain of the view that consumers are well-positioned with healthy balance sheets, increasing their willingness and ability to borrow and pay. Auto sector competition remained intense but balanced overall, as vehicle sales were robust, particularly for non-fleet retail sales. Strong demand continued to outpace OEM production, pushing industry inventories to multi-decade lows, which in turn is providing structural support for used values. We expect floor plan balances to remain low and use values elevated for some time before beginning to steadily migrate towards more normalized levels. Based on what we see today and in conversations we have with the dealer community, this will take us into next year. Within insurance, written premiums of $301 million reflected our highest second quarter of consumer volume driven by increased market share and strong vehicle sales. Investment portfolio performance remained solid, while weather claims were the lowest 2Q in over a decade. Turning to Ally Bank, organic and accelerating growth trends continued. Retail deposit customers ended at nearly 2.4 million, expanding 12% year-over-year, and representing our 49th consecutive quarter of growth. Retail balances grew to $129 billion, even as seasonally higher customer tax payments increased about 70% year over year. Our consumer product adoption trends remained exceptional. Ally Home originations of $2.2 billion increased more than 80% compared to the prior year period. Ally Invest self-directed customer assets grew to $15.6 billion, a 62% year-over-year increase, while accounts expanded 11%. And Ally lending volume of $299 million increased nearly four-fold year-over-year as we expanded merchant relationships and volume across healthcare, home improvement, and retail verticals. Corporate Finance posted another steady and solid quarter with combined held for investment and unfunded commitments exceeding $10 billion for the third consecutive quarter, including $6.2 billion of HFI balances. Performance across all of our businesses reinforces our broad customer reach, years of discipline execution, adaptability of our businesses, and ability to meet our financial and operational goals. On slide number six, our ongoing financial trajectory is evident across each of these key metrics, with trends having accelerated following widespread impacts experienced at the onset of the pandemic. In the upper right, we've included PPNR, which we know many of you look to as a measure of poor earnings power and as a key metric used by the Fed during CCAR exercises. We surpassed one billion this quarter, and expect to generate annual growth in the years ahead, though this may not always occur in a perfectly linear manner from quarter to quarter. On the bottom right of the page, tangible book value per share reached an all-time high of $38.83, reiterating the growth and intrinsic value of our company as our return profile has sustainably improved. As you've heard from me in the past, values, culture, and discipline execution remain central to our operating mindset, and we're excited to build upon our momentum in the years ahead as we continue to drive an improved earnings and return profile. With that, Jen, I'll hand it to you to review the detailed financial results.