Ally Financial Inc.

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 1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1 1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, have investor relations. Please go ahead.

Thank you, Daniel. Good morning and welcome to Ally Financial's fourth 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 two. GAAP and non-GAAP measures pertaining to our operating performance and capital results are on slides three and four. 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 and 2024 are 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 the call over to Michael.

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 five. In 2024, Ally delivered adjusted EPS of $2.35, core pre-tax income of $1 billion, and revenues of $8.2 billion. We are pleased with the 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. Fourth 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 first eight 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 third 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 fifth consecutive year, seven 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 three 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 first few months in my role listening and learning. I developed a greater appreciation for Ally'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 to 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 six 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 an 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've said before, Card is great business and we have a great 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 million restructuring charge. While it's not something we take lightly, This action is expected to contribute more than $60 million 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 million and CET1 by 20 basis points. Importantly, the impact of capital is net neutral in the medium term as the day one 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 seven to discuss our market-leading franchises. Within auto finance, consumer originations of $39 billion were sourced from a record 14.6 million 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 up 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 $1.5 billion 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 million and an ROE of 37% with zero 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 3.3 million depositors with $143 billion in balances. Deposit balances were up $1 billion 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, savings customers that leverage multiple core products and features by nearly 15%. Since 2019, we've increased Engage Savers from 300,000 to 1.3 million. 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.