A：Allied Financial's third quarter results include significant year-over-year earnings growth with adjusted EPS up 160 basis points to $1.15 per share. Core ROTC was 15% on a headline basis and about 12% excluding the impact of other comprehensive income (OCI). Adjusted net revenue was $2.2 billion, up 3% year-over-year despite the sale of the card business earlier in the year. Core net interest margin excluding core OID expanded by 3 basis points quarter over quarter. Additionally, CET1 was 10.1%, representing $4.5 billion of excess capital above regulatory minimums.

A：The introduction of the proprietary AI platform, Ally AI, is significant as it aids Edible teammates in streamlining tasks, automating routine work, and making more informed decisions, which is part of the company's ongoing efforts to enhance efficiency and support its growth.

A：Allied Financial has been recognized for its brand and culture, being honored by American Banker with an award for the most powerful women in banking and climbing the rankings on Fortune's best workplaces within its industry. These recognitions validate the company's culture and people, reflecting positively on its unique brand identity.

A：Dealer Financial Services is the cornerstone of the company's performance in the auto finance business, driving momentum with consumer originations of $1.2 trillion. This strength reflects a high application volume and the value proposition provided by the company's comprehensive suite of solutions, making it a unique strategic partner for dealers.

A：The origination yield of 10% reflects the company's disciplined strategy to balance attractive pricing with prudent risk management. This performance is a testament to the effectiveness of the company's strategy in the auto finance business.

A：The digital bank remains a key differentiator in the marketplace, with customer-first approach and a position as the largest all-digital bank in the U.S. with $102 billion in balances and serving over 40 million customers. It reinforces the company's funding profile and contributes to customer satisfaction and engagement.

A：The company is focused on doubling down on its core franchises, which are driving improved results and setting the stage for sustainable growth moving forward. It aims to create long-term value for all stakeholders, build a differentiated foundation that is resilient, scalable, and aligned with long-term goals, and see room for organic growth across each business over the coming years.

A：The sale of credit card provision expense was $415 million, which was down approximately 36% year over year. The NCO rates declined 36 basis points year over year to 1.88%, showing a trend of improving loss rates within the portfolio.

A：Noninterest expense was $1.2 billion, which was down $22 million sequentially and up $15 million versus the prior year. Controllable expenses were up year over year.

A：The net interest margin excluding OID was 3.55%, an increase of 3 basis points from the prior quarter. It was driven by the repricing of liquid deposit and CD portfolios and continued balance sheet remixing as growth across retail, auto, and corporate finance replaced lower yielding mortgages and securities.

A：The expectation is for modest expansion in the portfolio yield with retail auto loan growth supporting the balance sheet remixing. Lower benchmark rates will influence the originated yield and impact the portfolio's ultimate trajectory.

A：Industry-wide liquidation activity has increased with most activity being traditional trade-ins. Liquidations have been concentrated in lower-yielding loans, which has impacted net interest.

A：The historical comparison of deposit beta shows how it evolves through a series of Federal funds rate reductions. It indicates that while Ally is liability sensitive in the medium term, it is asset sensitive in the very near term due to floating rate commercial loans and pay fixed hedge exposure.

A：The cett 1 ratio of 10.1% represents approximately $4.5 billion of excess capital above the SD minimum on a fully phased-in basis. The latest transaction involving a $5 billion retail auto credit risk transfer generated about 20 basis points of CET 1 and reflected strong investor demand.

A：The quarterly common dividend is 15 cents per share for the fourth quarter of 21. Share repurchases remain a key capital management priority. Adjusted tangible book value per share of $39 increased over 11% from the prior year.

A：Credit trends within the portfolios remain encouraging with a consolidated net charge off rate of 118 basis points, a decline of 32 basis points year over year. This quarter's rate reflects the impact of the car sale and the year-over-year improvement in retail auto.

A：The retail auto coverage rate remained flat at 1.25%. The model contemplates a consensus outlook with peak unemployment of 5.2% before reverting to a historical mean near 4.9%. Reserve releases are not forecasted and are not incorporated into the mid-teens return guidance.

A：The expectation for remarketing performance is for it to be less of a factor moving forward, given the reduced volume of terminating units not covered by residual value guarantees.

A：The retail auto portfolio yield, excluding the impact from hedges, increased 14 basis points quarter over quarter. Originated yield of 9.7% was down 10 basis points, with 42% of retail volume generated from the highest credit tier. Prime credit remained the majority of originations, with FICO scores below 620 representing roughly 10% of volume and sub-540 volume only 2%, consistent with historical trends.

A：Consumer originations were $11.7 billion, up 25% year over year, driven by a record 4 million application volume.

A：The core pre-tax income of the insurance business was $52 million, which was up $6 million versus the prior year. Total written premiums were $385 million, up $1 million year over year and up $36 million sequentially.

A：Corporate finance results show a core pre-tax income of $95 million, reflecting another strong quarter with a 30% return on equity. Net revenues of $136 million were up $9 million from the previous quarter and down $10 million from the prior year.

A：The credit quality of the loan portfolio remains strong with no new non-performing loans and no charge-offs. criticized assets and nonaccrual loan exposures are less than 1% of the total portfolio, remaining near historically low levels. The current macroeconomic environment is well positioned and the growth trend is important to note.

A：The financial outlook indicates that the margin range is expected to be 3.5% to 3.5%, consistent with prior guidance. Full year Net Interest Margin (NIM) is expected to land in the upper half of the 3.4% to 3.5% range. The fourth quarter NIM is expected to be roughly flat to the third quarter, influenced by the Fed's series of Fed fund rate reductions. The full year NIM is expected to migrate to the upper threes, but not in a straight line.

A：The expected full year effective tax rate is approximately 22%.

A：The company acknowledges the uncertain macro environment and is closely watching it. They are not seeing macro uncertainty impacting credit performance, and consumer behaviors are better than expectations despite the uncertain macro environment.

A：The presentation mentions a historical case study starting on page 19 that tracks the bank's data evolution following the FS rate reduction in September and December of the previous year. It indicates that the NIM expansion in the first quarter (Q1) of the following year was driven by the catch-up of beta, a dynamic expected to repeat given the Fed's recent series of rate cuts.

A：The bank expects other smart, sophisticated financial institutions to recognize the attractiveness of its market, particularly noting the attractiveness of its 2024 vintage and the back half of 2023 in terms of risk-adjusted returns. The bank has seen competition from various players throughout the year but has managed this competition by being thoughtful about where and how it plays in the market.

A：The bank's consistent presence in the market and partnership with dealers and origination services have translated into a tremendous amount of momentum, resulting in record application volume for three straight quarters. This has led to great originations in terms of volume and credit quality, supported by some degree of demand pull forward due to factors like tariffs and the expiration of a tax credit program.

A：The bank feels great about the progress it has made in capital management over the course of the year, having increased its CET1 ratio while supporting core business growth. This improvement is due to difficult decisions regarding business exits and the flexibility from transactions like the CTRANs. The bank views share repurchases as a key priority and will consider improving fully phased-in CET1 ratios and organic capital generation as important factors for timing share repurchase program decisions.

A：The bank's updated view is that average earning assets are expected to grow at a low single-digit pace next year, implying an inflection point. This growth is due to the anticipated ongoing runoff of the mortgage loan portfolio versus the growth in core businesses like retail, auto, and corporate finance. The impact of exiting the card business, mortgage, and dealer inventories is already reflected in the flat year-over-year comparison on earning assets, with growth in the desired portfolios offset by the effects of exiting other businesses and softness in the dealer inventory segment.

A：The company expects low single-digit percentage growth in earning assets overall, with faster growth anticipated in retail auto loans and corporate finance.

A：Liquidation rates are normalizing post-pandemic and remain predominantly a trade-in story rather than refinancing. The auto product is not typically a refinancing product. While there is an increase in refinancings, they come off a small base and are a small part of the overall picture. Consequently, liquidations are more influenced by trade-ins and tend to involve lower-yielding loans, which hasn't significantly impacted the company's net interest margin (NIM) negatively.

A：The company is focused on its current business base and sees no desire to enter new areas. It feels confident in its current businesses and is not looking to venture into new lines of business. However, it is exploring potential adjacencies within existing business areas such as dealer financial services or corporate finance that are closely related to its current operations.

A：The strength in origination is attributed to a consistent approval rate and capture rate with historical norms, and the opportunity set that drove application volume. A significant factor in the strength of lease volume was the expiration of the ECV lease tax credit program on September 30, which led to a pull-forward in consumer and dealer activity to take advantage of the tax credit before the deadline. The company also attributes the origination strength to its dealer and OEM customers' satisfaction with the company's support in selling vehicles and its comprehensive financial products and services.

A：The company's peer highlighted an accelerating delinquency rate, which the company has not experienced. It believes its approach to credit performance and servicing strategies, including modification rates and the success rate of borrowers coming off modifications, is effective. However, specific details about these strategies were not provided in the transcript.

A：The positive performance of the company's lower credit segment is attributed to decisions made in 2023 which led to strong books, especially in the back half of 2023 and the 2024 vintage. Enhancements in servicing strategies have also played a significant role, particularly in improving communication with customers and reducing friction in processes like extensions and modifications.

A：The company has evolved its communication approach by becoming more digital, tailoring communication methods to what resonates best with customers, whether that's email, digital, chat, or telephone. The company has also implemented more frequent and transparent notifications to customers regarding their process status, which has helped in assisting customers who want to retain their car and work with the company, as well as in streamlining processes like extensions and modifications.

A：The company has put policies in place requiring customers to contribute cash upfront to enter into programs. They have also adjusted the timing of repossession in a thoughtful way, using behavioral modeling to delay repossession where it makes sense, giving agents more time to work with customers, which has led to better outcomes. These adjustments are based on an understanding of how loans behave over time.

A：The company is closely watching macroeconomic uncertainty, especially in the employment picture, and acknowledges potential impacts. However, they are confident in the tangible benefits received from vintage rollover and servicing enhancements implemented over the years, which have positively affected their operations.

A：The company is continuously analyzing rich data sets created from their extensive application volume to identify segments with incremental opportunities for profitable business. They overlay a macro view and are careful not to overemphasize macro factors, which currently look good despite some uncertainty. Ongoing efforts to refine their approach and identify new profitable business segments are expected to eventually improve conversion and closing rates, although the exact timeline for the impact is not specified.

A：The company's pass-through programs provide value to dealers beyond the balance sheet underwriting, and there is an economic benefit from servicing these programs deeper. The company views the volume of applications and loan activity as beneficial for learning and maximizing business impact, including for the dealer community.

A：The company plans to continue using CRT transactions as a tool for low-cost capital and will be active in the market. They intend to use this tool thoughtfully and opportunistically, closely monitoring the rampdown of risk-weighted assets as the underlying loans run off quickly. Expectations are for the company to continue engaging in CRT transactions.