Ally Financial Inc.

Good day, and thank you for standing by, and welcome to the first quarter 2023 Ally Financials Incorporated 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 the question during the session, you will need to press star 11 on your telephone. You will then hear a message advising your hand is raised. To withdraw the question, simply press star 11 again. please be advised that today's conference is being recorded. I would now like to hand the conference over to Mr. Sean Leary, Head of Investor Relations. Please go ahead.

Thank you, Carmen. Good morning, and welcome to Ally Financial's first quarter 2023 earnings call. This morning, our CEO, Jeff Brown, and our interim CFO, Brad Brown, 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 two. GAAP and non-GAAP measures pertaining to our operating performance and capital results are on slide three. As a reminder, non-GAAP or core metrics are supplemental to and not a substitute for U.S. GAAP measures. Definitions and reconciliations can be found in the appendix. And with that, I'll turn the call over to J.B.

Thank you, Sean. Good morning. We appreciate you joining us this morning to review our first quarter results. I'll begin on page number four. Adjusted EPS of 82 cents, core ROTC of 12.5%, and revenues of $2.1 billion reflect continued execution across our businesses in a dynamic operating environment. Net interest margin remained resilient at 3.54%, as a result of disciplined pricing on both sides of our balance sheet. Originated yields on retail auto averaged 10.9% for the quarter, reflecting our ability to leverage dealer relationships to originate strong risk-adjusted returns. Since the start of the tightening cycle, we've added 455 basis points of price into the market, implying a beta of nearly 100% while remaining disciplined on risk content. The total portfolio yield will continue to move upward towards newly originated yields, which represents a nice tailwind for the foreseeable future. While operating results were in line with expectations, adjusted EPS is below consensus driven by a 10 cent headwind from valuation adjustments of certain equity investments. Despite the $41 million impact this quarter, these investments have generated accretive returns for Ally. Given the events in our industry that transpired in March, we thought it was important to spend additional time highlighting our deposits franchise and overall liquidity position. Retail deposits finished the quarter up $813 million. We also added a record 126,000 net new deposit customers. Our retail deposits exceed $138 billion, of which 91% are insured by the FDIC. Our insured deposit balances increased $4 billion within the quarter. In addition to retail deposits, we maintain access to multiple other funding sources and currently have total available liquidity of $43 billion. For context, our liquidity position is 3.6 times our uninsured deposit balances. Common equity Tier 1 was relatively flat quarter over quarter at 9.2%. Current CET1 exceeds our SDP regulatory minimum by $3.5 billion, and we absorbed another year of the CECL phase-in. Operational highlights reflect the strength of our leading franchises. Within auto finance, we decision more than 3.3 million applications in the quarter. Said another way, we evaluated $100 billion in potential originations this quarter and booked $9.5 billion of loans that met our risk-adjusted return hurdles. Consumer demand remains strong. Net charge-offs were 168 basis points. Results within the quarter were in line with expectations, and Brad will provide detailed commentary on our credit outlook later. Within insurance, written premiums of $307 million were up meaningfully and reflect continued momentum as we grow and deepen dealer relationships. Turning to Ally Bank, total deposits of $154 billion were up $11.5 billion year over year. Consumer engagement and adoption trends across our other Ally Bank product offerings remain strong. 1.6 million customers across credit card and point-of-sale lending provide opportunities to deepen relationships and diversify our earnings profile. Corporate finance remains focused on serving customers while delivering strong risk-adjusted returns. Our health for investment portfolio of 10 billion was flat quarter over quarter. In terms of credit quality, the portfolio is all first lien positions. Our CRE exposure is limited in size, concentrated entirely within the healthcare space, and represents approximately 1% of total loans on the balance sheet. Turning to slide number five. A strong, purpose-driven culture is more important now than ever. We maintained a consistent focus on culture over the past decade, and it's fueled significant progress strategically and financially. Our focus remains on driving long-term value for all stakeholders, but that is only made possible by delivering for our employees, customers, and communities on a daily basis. For our employees, the first year of our ONIC grant program vested, providing 100 shares of Ally stock to those employees who have been with us for the past three years, further strengthening the owner's mentality we embrace across the organization. And I'm particularly proud of the enhanced benefits we've offered to our associates and their families to help manage mental health. For our customers, we continue to enhance digital capabilities across our product suite to ensure we're offering a seamless customer experience. For our communities, we continue to advance the equality in women's sports through partnerships like the one announced in February with the Walt Disney Company. I'm more confident than ever that our culture will be a critical differentiator in both the good times and tough times. Turning to slide number six, we've highlighted the strength of our consumer deposit franchise. Over the past 14 years, we've built a sustainable model focused on doing the right thing for our customers. The steady growth from new and existing depositors demonstrates their desire to keep their money at Ally and grow with us. Our customer base is now 2.8 million strong with growth led by millennial and younger cohorts signaling the continued opportunity ahead. Our performance throughout the market volatility in March highlights the overall strength of our consumer deposit business. 91% of our deposits are insured with the FDIC. Average balances within uninsured deposits are some of the lowest among peers. The portfolio in total has an average account balance of approximately $50,000, and our customer-centric approach continues to resonate, evidenced by 96% customer retention. Importantly, we've delivered this performance while consistently providing best-in-class technology and customer service in pricing below top rate payers. Moving to slide number seven, we provided incremental detail on trends within our retail deposit portfolio. The composition of our portfolio and the strength of our brand enabled us to navigate the volatility of the past several weeks with minimal impact. Looking at the bottom left, we had our strongest quarter of net customer acquisition since 2009, which is essentially the best quarter in our bank's history. Since we've reached deposit core funding, we've been able to focus on growing and deepening customer relationships. On the bottom right, we've seen a gradual decline in uninsured balances over the past year. In total, uninsured balances are down 4.4 billion year over year, but more than offset by 6.9 billion of insured deposit growth. Outflows among uninsured accounts were elevated the week of March 13th, but were more than offset by strong inflows. For new customers during the market volatility, the Ally brand resonated as a source of strength as they looked to diversify their deposit balances across institutions. Looking ahead, I remain confident in our ability to balance growth and pricing given our 88% deposit funding in multiple market-based alternatives. On slide number eight, we've highlighted the depth of our non-deposit funding sources. While recent events have highlighted the resiliency of our deposits book, we will continue to maintain access to multiple alternative sources of liquidity for risk management and diversification purposes. In the case of home loan bank advances or repo agreements, we can access more than $30 billion of incremental funding in a matter of hours. Importantly, we found that home loan bank advances in the month of March were executed efficiently despite the elevated activity seen in the industry. Burkard CDs continue to serve as an efficient complement to the retail book, and we have access through several firms and across the maturity curve. Our unsecured debt issuances are investment grade and a key source of parent company liquidity. Based on our current liquidity profile and liquidity risk metrics, we don't have to issue any unsecured debt in 2023, but we will remain opportunistic depending on market conditions. Obviously, there's been pretty modest big issuance since early March, but we expect markets will start to open as stress starts to wane. We have a mature securitization platform that is well known in the market that we can leverage to match fund retail auto assets. We have grown the retail deposits book by almost $60 billion over the past five years, which has reduced our need for other funding. Today, we leverage these options more opportunistically, allowing us to optimize cost of funds and manage duration. I know this is a lot more to cover than normal, but given the volatility of the past month, we wanted to highlight the significant access we maintain to non-deposit funding. Moving to slide number nine, we provided a snapshot of our current funding stack and available liquidity. Again, we remain core funded with deposits making up 88% of our funding footprint. On the right side, we summarize our total available liquidity position of $43 billion, which is up nearly 30% in just the last six months. In total, this liquidity is 3.6 times uninsured deposit balances. We have seen time and time again that liquidity is the single most important factor for a healthy bank. We have always prioritized prudent liquidity risk management and will continue to do so going forward. Obviously, it was an interesting quarter, but we fared well and I'm proud of how the team responded. We are well positioned from a variety of perspectives, and while some of the defensive but prudent actions pressure the next six months of earnings guidance, Long-term, we still forecast the impressive return expansion. With that, I'll turn it over to Brad to cover our detailed financial results.