Ally Financial Inc.

Welcome to the Q2 2025 Ally Financial 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 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. 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 Allied Financial's second quarter 2025 earnings call. This morning, our CEO, Michael Rhodes, and our CFO, Russ Hutchinson, will review Allied's results before taking questions. The presentation we'll reference can be found in the Investor Relations section of our website, allied.com. Forward-looking statements and risk factor language governing today's call are on page 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 Michael.

Thank you, Sean. Good morning, everyone. And thank you for joining us for our second quarter earnings call. Let's begin on page four. I'll start by saying that I'm encouraged and energized by the progress we've made as an organization over the first half of the year. Our sound strategic positioning and discipline execution are contributing to an improved financial trajectory, which is clearly reflected in our second quarter results. In the second quarter, Ally delivered adjusted earnings per share of 99 cents and core pre-tax income of $418 million. We achieved double-digit year-over-year growth in both metrics, underscoring the benefits of a more focused, streamlined, and purpose-driven institution. Net interest margin, excluding core OID, was 3.45%. expanding 10 basis points quarter per quarter. That's more than offsetting the 20 basis point drag related to the sale of the credit card business. We continue to run off low yielding mortgages and securities and add higher yielding retail auto and corporate finance assets funded by high quality, stable, and low cost deposits. This structural remixing of the balance sheet sets the foundation for continued margin expansion going forward. Our first half trajectory reinforces my conviction in our ability to deliver compelling and sustainable returns over time. We delivered a core ROTCE of 13.6% in the quarter, but as you know, AOCI reduces the ROE denominator. Excluding that benefit, we generated a core ROTCE of 10%. I'm pleased the progress we've made and I'm even more encouraged by the momentum we're building. We recognize there's significant opportunity ahead, and we are well positioned to capitalize on it. As I reflect on the quarter, there are three key takeaways that I will expand on. First, our sharp strategic focus is transforming Ally into a stronger, more profitable institution. Second, the Ally brand continues to resonate deeply with our customers, building loyalty and trust. And third, our customer-centric culture remains one of our greatest differentiators. Our strategy remains clear and is being executed with discipline by our over 10,000 colleagues across the organization. Our three core franchises are meaningfully differentiated with tremendous runway and scale. The new business we're putting on the balance sheet today is expected to generate a mid-teens return over its life. In dealer financial services, we're booking new fixed-rate retail auto loans at nearly 10%, funded by core deposits below 4%, with expected annual losses between 1.6% and 1.8%. DFS also continues to benefit from strong fee revenue driven by our pass-through and smart auction adjacencies. Our insurance business continues to benefit from natural auto-related synergies, lean to robust written premium growth and investment revenue. In corporate finance, our portfolio has attractive floating rate yields, and we continue to see healthy fee income from syndications. This business continues to deliver strong returns across different credit cycles, anchored by seasoned leadership and disciplined underwriting. Altogether, these businesses, backed by a strong deposits franchise, are positioned to deliver mid-teens returns. And now to our brand. Whether through strategic partnerships, impactful marketing, or deep community partnerships, the Ally name stands as a brand that is synonymous with trust and purpose. Our Net Promoter Score remains well above industry averages, reflecting the strength of the relationships we've built. Our customers are our greatest brand advocates. Roughly 15% of new deposit clients are sourced from our Refer a Friend program. A strong, trusted brand is a powerful growth multiplier, and we are seeing that every day through efficient customer acquisition, strong retention, and deeper engagement. And finally, a few reflections on our culture. Do it right is more than a slogan. It's a shared ethos that shapes how we serve our customers, support our teammates, and show up in the communities we serve. We invest deliberately in nurturing our culture, and our results are clear. In fact, just last week, our latest employee engagement survey ranked us in the top 10% of all companies for the sixth consecutive year, eight points above the financial services industry benchmark. Beyond attracting and retaining top talent, this level of engagement fuels performance. It accelerates change and enhances the customer experience which is reflected in our customer service satisfaction rating, which is holding strong around 90%. With that context in place, let's turn to page five to dive into operational results and performance trends this quarter. Within our auto finance business, consumer originations of $11 billion were driven by 3.9 million applications, marking our highest quarterly application volume ever for the second consecutive quarter. This sustained momentum of application flows speaks to the strength of our dealer relationships and the scale of our franchise, and reinforces our position as the top bank auto lender in the country. Our scale enables us to be highly selective in the loans we book, optimizing both pricing and credit decisioning. Origination yields of 9.82% were up slightly versus the prior quarter, and down 77 basis points from the prior year. Notably, this decrease was more modest than the decline in benchmark rates, highlighting the relative strength in our pricing position. Forty-two percent of our originations come from the highest credit quality tier, which will continue to support strong risk-adjusted returns moving forward. This quarter marked the ninth consecutive with over 40 percent S-tier mix in new origination volume. As we've outlined in previous calls, we expect our origination mix to normalize gradually over time. Our ability to dynamically adjust both price and risk appetite gives us the flexibility to evolve alongside market conditions. Let's turn to insurance, where our average dealer inventory exposure rose by 23% year over year. Driven by new relationship wins, and tight integration with our auto finance business. We have 3.9 million active policies outstanding, an increase of over 1 million since our IPO. Our insurance team supports 7,000 dealers across the United States and Canada, and with access to a broader network, we see meaningful opportunity to grow our footprint. I'm pleased with the strong performance and the alignment between our auto and insurance businesses, which enhances the value proposition we offer our dealer customers. In corporate finance, we delivered another strong quarter, generating a 31% ROE. Our longstanding relationships with financial sponsors have supported solid growth, which attracted returns, all while maintaining disciplined risk management. We continue to see opportunities for prudent organic growth within our current verticals, and are actively exploring new products and solutions to generate incremental creative business. Turning to our digital bank, we remain focused on delivering best-in-class digital experiences that empower customers to save, invest, and spend with confidence. With no hidden fees, an award-winning mobile app, nationwide ATM rebates, and 24-7 access to live customer care, Our customer-first approach sets us apart. This commitment earned us multiple accolades again this quarter for customer satisfaction. Our robust suite of digital tools is driving deeper engagement, fueling customer loyalty, and reducing rate sensitivity. We proudly serve an all-time high of 3.4 million customers, marking 65 consecutive quarters of net customer growth. We ended the quarter with balances of $143 billion, reinforcing our position as the nation's largest all-digital bank. Overall, deposit balances were down approximately $3 billion quarter over quarter. Now, this is aligned with our April guidance, largely due to seasonal tax outflows. For the year, we continue to expect relatively flat balances which is sufficient to support the asset side of our balance sheet. At the end of June, we lowered liquid savings pricing an additional 10 basis points, representing a cumulative 70% beta since the start of the Fed easing cycle in the second half of 2024. Deposits are the foundation of our funding profile, representing nearly 90% of total funding, and 92% are FDIC-insured, demonstrating both strength and stability of our deposit base. Now, before I turn it over to Russ, I'd like to leave you with this. If there's one thing to take away from today's call, it's that Ally's focused strategy is working, and you're starting to see it in our results. We have three market-leading franchises with tremendous runway, backed by an industry-leading brand and a culture that sets us apart. And with that, I'll turn it over to Russ.