Ally Financial Inc. (ALLY) Earnings Call Transcript & Summary

All right. Up next, we are excited to have Ally Financial joining us once again this year. Ally, I think, indisputably managed to have the best financial performance of any company in my bank and consumer finance base over the last 2 years, with the returns north of 20%. Its business benefited from its moat around retail, auto lending and insurance as the industry's largest players, expanding margins as it demonstrated pricing power as well as environmental factors, such as higher used car prices, which obviously helped a handful of things. However, the market continues to under appreciate both the diversity of its business and the growth potential that lies ahead in its consumer direct bank. So here to tell us more about what lies ahead is CEO, Jeff Brown. Today's presentation is going to be fireside chat. Also joining us in the audience is CFO, Jenn LaClair.

So J.B., maybe we can start off with Ally's strategic journey over the last handful of years. You've steadily built what I think many of us view as a leading auto and insurance platform, alongside the largest and growing all-digital bank. Can you maybe just walk us through your views on what you view as the differentiators for your business and what the future holds for each of these franchises? And how is the business positioned for success into 2022? And what do you see as the major drivers of growth from here?

Sure. Well, thanks. Good morning, everyone. It's great to be here. Nice to be actually back in person together. I appreciate, Ryan, you have the Ally team here to tell our story. So yes, I always like to say, really, it starts with our people. Fantastic people really across the company. We're up to 10,000 teammates now, but the teammates that we have at Ally are truly incredible and kind of positioning the company really in its next stage of evolution. So Jenn and I like to talk with our Board about kind of if you go back 10-plus years ago, the company was really in deep restructuring mode. Then we went into a growth mode, and now it's really about optimizing returns. But for us, Ryan, as you mentioned, really strong positions in automotive to begin with, our auto and insurance business being deeply integrated there. I mean, despite all the things that you read about the auto environment, this is the best year for originations in our company since 2004. We will end up booking $46 billion of retail loans this year, and this will be the fourth consecutive year where the earning asset yield is 7%. And think about the credit environment we're in today. It's, I mean, extremely benign. We know that won't last forever. But I think retail auto credit losses this year are going to be in the neighborhood of about 32 basis points on average. So a pretty attractive business when you're booking 7% yields, very minimal credit losses and funding at sub-1% deposits. But a lot of that comes back to the strength of our relationship. So today, we do business with 20,000 dealers in the U.S. We're the largest prime lender in the U.S. Super prime is a space we don't like to compete in. You really don't generate the appropriate returns. And for us, we kind of doubled down on the used car market years ago, and it's been fantastic for the amount of flow that we see and how we service our dealer community. We're up to about 13 million applications this year, so pretty incredible/. So I start with auto as really being kind of the 800-pound gorilla empowering us and then, Ryan, as you mentioned, is really growth of the bank and what we're doing there. So our retail book this year, we're going to finish the year at $134 billion of retail deposits, $134 billion. Think back 10, 11 years ago, that was effectively 0. We have no bricks and mortar. All digital banking, we're the largest all-digital bank in the U.S. today. And so we use deposits as really the gateway product to bring customers into the bank. But from there, our Ally Invest platform now up to $17 billion in investments. Our Ally Home platform, now this year, we're going to generate over $10 billion in DTC loans. Our Ally Lending business, which is our point-of-sale lending capability, we're going to end up in the neighborhood of $1.2 billion in loans. And then obviously, we just closed on the acquisition of Fair Square Financial, a small credit card company, all digital. And so we think that's going to fit extremely well. So really scale, what I want you to take away is the tremendous scale we have on both the auto side as well as the digital banking front. I don't think anyone is positioned as well as we are for growth going forward.

J.B., before we get into the businesses, I know culture is a top priority at Ally. Can you maybe just share with us why this is so important to you as the CEO and how you think a strong culture translates into better financial performance or customer value at Ally more broadly?

Sure, of course. So I said this to my Board all the time. My Chair of the Board is actually in the room, Fritz Hobbs. The single thing I'm most proud of in the evolution of our company is the cultural evolution over the past 6, 7 years. It's been really remarkable. And we keep it simple. You get the culture right, has a tendency to get the operations right, which takes care of the financials, which takes care of all the constituents you serve, your shareholders, your communities and, of course, your employee base as well. And so we treat culture as a living, breathing creature. We talk about it 365 days a year. It needs to be nurtured. You've got to care for it just like any asset. And so it is critically important for us. We took a number of big steps forward to try to do the right thing for our employee base this year, including a $20 minimum wage. Every employee in the company for 3 years in a row will get a minimum of 100 shares of stock. Why do we do that? It emphasizes the ownership mentality that we want every single teammate in the company to have. And when people think like owners, they think in a different manner. And so it's been incredibly powerful. I'm very thankful that the Board has allowed us to do this. And again, 3 years of really creating this founder's mentality. Beyond that, we have about 40% of our teammates inside the company that voluntarily participate in employee resource group. So you think through the crisis of 2020, it wasn't just about COVID. We also have the continued systemic racism and social injustices. Obviously, first impacting the Black African-American community, but ultimately, the Asian community as well. We didn't run from that. We didn't hide from that. We use forums to really talk about it, bring in speakers, engages groups to really strengthen our culture and drive the whole company forward. And it's been really remarkable. You can do all these things, and it doesn't come secondary to delivering strong returns. Ryan, as you opened up, we've had some of the strongest returns in banking. At the same time, we've done all the right things for the employee base for the communities. And then finally, I'd just say in serving the communities, we established the Ally Charitable Foundation about a year ago, and it's up to meaningful dollars. It's close to $100 million, and we're making impact in all the locations we serve. We still have deep partnerships with organizations like Thurgood Marshall and our partnership with a program called Moguls in the Making there. It's been really remarkable. So it comes back to a strong culture, takes care of the rest.

So J.B., you've described that Ally as being structurally more profitable today versus what the company was several years ago. And maybe just following up on your strategic evolution comments, what are the most significant markers in your mind that investors should take notice of in terms of what is different about Ally today?

Yes, Ryan. So I'd come back and start with the strength and the scale of those 2 big franchises to begin with. I mean, that is a huge differentiator there. But also you look at how efficient we are from a funding perspective today. We are over 90% core funded. Again, that stat I mentioned, $134 billion of retail deposits, I mean, it's really remarkable. And so sorry to Goldman Sachs and others, we're not going to be very active in the capital markets. And Jenn and her team have done a remarkable job in really optimizing the liability structure, the capital structure of the company. So for us, we're so much more efficient. And then you come back to, again, 4 consecutive years with an average earning asset yield, new originations of north of 7%, okay? The portfolio yield today on balance sheet is about in the neighborhood of kind of [ 6 75 ], [ 6 80 ], so you have this natural tailwind that's still coming through. NII is going to be well, well in excess of 3%. We think we'll be well north of that. So you have all this power that's being fueled out of the balance sheet today, but still, I think, underappreciated in the market.

Maybe just to follow up on that. So pre-COVID, Ally was earning high $3s, maybe $4 per share. And while we know 2021 has been strong, I think investors do question as to whether or not you are over-earning. Therefore, are normalized earnings longer term for Ally in the $6.50 or $7 plus range per share? And can you help us understand maybe some of the moving pieces?

Sure. So I mean, I'd say it's well in excess of $7 per share is kind of the new norm. And a lot of that is, again, the retooling that we've done for the past 10-plus years. But I mean, the simple -- some of the simple math, if you think -- our tangible book value per share will end this year at about $40, slightly north of $40. And if you assume that you're going to earn ROTC in the neighborhood of $16, I mean, that kind of backs you into the neighborhood of $7 a share. And so we have complete confidence there. And again, part of this, all the retooling, the restructuring of the company. And we recognize that this is -- 2021 has been a bit unusual. And I think Jenn and I would tell you the ROTC of the company is in the neighborhood of 23% this year. That's not the norm, and we're trying to message though, $15, $16 plus certainly is and potential for upside, depending on how long some of the normalization takes away.

So maybe digging in a little bit to the auto business. The auto sector, as you highlighted, has been very, very strong and arguably too strong, with consumer demand driving lower supply amongst dealers. Although we did hear somebody this morning saying that dealer inventory is starting to level off. And Ally has successfully transitioned from a captive to being the largest standalone auto provider in the U.S. And you just -- and you described today's priority as deepening the competitive motives, as you said. Can you maybe just talk about how you're winning and what all this will mean for growth over the intermediate time?

Yes. I mean, a lot of it comes back to relationships that we have with the dealer community. And again, we're up to 20,000 dealers in place today. And so you have, in some cases, multigenerational relationships with these dealer customers. And so 20,000 dealers, you're seeing 13 million applications. Our strategy really show us everything, and that enables us to have this opportunity to decide what we want to buy. And so for us, again, $46 billion of new paper this year. I mean, that is one of the unique things in banking. We are actually out being one of the loan growth drivers, originators. And so for us, the auto business is extremely, extremely well-positioned. And then on top of kind of the normal dealer body, you have new players. The Carvanas of the world, the EchoParks of the world, the all-digital Vroom and other players. And I think we've done a nice job of building relationships with those players as well, and that provides another source of strength. And then beyond all these things, we talk about we -- in-house, we have our SmartAuction business. Despite what you're seeing and no availability of used cars and off-lease vehicles, our SmartAuction revenues are going to be up 35% this year relative to 2019 in a more normalized environment. So we continue to invest in driving some of the digital capabilities. And all those things, when you package that together, that, in turn, creates a tremendous moat. And again, in my opening comments, we're not out chasing super prime loans. I think we rank somewhere in the neighborhood of like 13th in super prime, but we're #1 in that prime share, and that is where our expertise lies really in the belly of the curve.

J.B., you referenced multiple times that yields have been in excess of 7% for 4 consecutive years. I guess, what's driving your ability to maintain such strong pricing in this low rate environment? And where could yields go when rates do rise? And how do you think customer loyalty on the dealer side plays into this?

Yes. I mean, again, I think dealers are basically, today, they're trained to show us everything, particularly in any user application flow. So when you're seeing 13 million applications per annum, you can sort of pick and choose where you want to buy and what you want to buy. And obviously, in the used space, there's a number of big auto players that are out there that focus solely on the new car market and that, obviously, in this environment, wouldn't have been a great position to be in. I think when you go back to 4, 5 years ago when we really said, "How do we help make the dealer community successful? What are their needs?" They needed more on the used front. And so we repositioned our business to support them in that regard. And so again, that's led to tremendous application volume, origination flow, but also exceptionally strong pricing, and that comes back to our sweet spot is being in the prime space. It's not the deep subprime. It's not the super prime, staying in the belly of the curve, and that's worked incredibly well for us.

So when I think about the overall performance of the business, clearly, credit has been performing exceptionally well over the last 18 months due to a magnitude of factors, whether it's government stimulus, elevated savings and obviously used car values. I would be interested to get your perspective as CEO of the largest auto dealer, but also you Chair the FRB Advisory Council on what your expectations are regarding the pace of normalization for charge-offs. Ally has obviously talked about a 1.4% to 1.6% level of losses, which I think you've only been in once in the last 8 years. How do you think about losses? And how do you think about the path over an intermediate time frame?

Sure. So -- and Ryan, I do apologize. I failed to acknowledge your question about in a rising rate environment. So again, our portfolio yield right now is about [ 6 80 ] somewhere in that ZIP code. If we think Fed funds will get on the rise next year, in a normalized funds environment, call it, 2%, 2.5%, we see the overall portfolio yield migrating close to 7.5%. So there's certainly -- it's not necessarily a one-for-one basis point increase that we factor in a moving rates, but we do think there's still pricing power there. And then obviously, in terms of credit, this has been a pretty unusual environment. So our underwriting strategy, our origination strategy, we underwrite with the assumption of a 1.4% to 1.6% loss rate. We haven't been anywhere near it, as you pointed out, but we don't think that will be the case forever. So you're in the ZIP code this year about 35 basis points of losses in the retail book. Overnight, that's not going to 1.4% to 1.6%. That -- we think that's a multiyear normalization. But obviously, there's been a tremendous amount of fiscal and monetary stimulus put in the market, and a lot of that was needed. Maybe some of it wasn't. Maybe some of that support ended up in borrowers' hands that really didn't need the support. But this benign environment will not last forever, and part of our strategy during this time has been to continue to invest in the digital self-service capabilities, servicing capabilities on the auto side. So whenever this environment does turn, we're much better prepared to deal with the customer. But core credit underwriting has been at the heart of the company for 100 years, and we haven't seen anything like this environment.

Makes sense. So great. Maybe let's shift gears and talk a little bit about Ally's digital bank platform. As you touched upon, the company has had tremendous success growing deposits to, I think you said, $134 billion. And I think the customers are over 2.5 million in a little over 10 years. What are the growth priorities from here and now that you're at that target funding level?

Yes. So I mean, for us, we've been on this journey to kind of grow the book and scale the book. And I think given we're at 90% core funded today, it allows you to sort of think about your deposit book and base in a slightly different manner. And so now it's similar to auto. Auto is the focus the past few years. It has been more around optimization. And I think that's what we're going to start seeing in the bank today. And so we've got an evolving shift in our focus on households. And so what's important to household? So we typically, today, we haven't had a big focus on what we call the spending product, also known as checking. But I think you'll start to see us kind of reposition to start growing more of the spending product. And then we're continuing to find tools to help customers manage their financial lives. And so really proud of what Diane Morais and the entire deposit team has built and has driven. I mean, it's an incredibly strong franchise. But if you think about deposits as a gateway product, what we have done very well is build multi-product relationships with other products in the Ally family. And so again, some of the things I mentioned, Ally Home business, our mortgage business, now up to $10 billion of direct-to-consumer loans this year. Our Ally Invest business, and that's where we see a tremendous amount of cross pollinization between the deposit account and the invest account. You're up to $17 billion in assets there as well. And then the newer capabilities, more focused in the unsecured lending space, obviously, Ally Lending, and again, we're going to originate somewhere in the $1.2 billion of loans this year. But I think the addition of Fair Square also further helps to strengthen that moat. And by the way, just to point it out, we did get that deal already closed. So we closed December 1, and so Fair Square is now part of the Ally family, and we're already well on the road of integration processes there.

And as you mentioned, obviously, well in excess of the time frame when it was supposed to close later in the next quarter. And so I guess, you touched on a lot of things across your consumer products. Obviously, since 2016, you've added mortgage, brokerage, point of sale. And now as you just articulated, with the close of the acquisition, credit card, all within the digitally-based platform. And we could all see from looking at the disclosures, that growth, you're showing accelerating growth trends among -- the one -- these -- that are already working on their ramp. What's the outlook for these businesses look like from here? And how should both you and us define success in terms of the growth prospects of these businesses?

Yes. I mean, I think -- look, with respect to mortgage, obviously, that's going to be somewhat environmental or what happens in rates and what happens in the mortgage environment. Obviously, we've been in a pretty good -- particularly in terms of refi, we've been in pretty good environment today, so $10 billion of loans this year. I think, over the next couple of years, we see that easily scaling up to $15 billion. Again, some of this will be driven by the environment. But I think longer term, Jenn and I in working with -- in partnership with the team have sort of asked the question, what holds us back from being at $25 billion or $40 billion in originations there? I mean, mortgage being a core consumer product, we think that's still a very attractive opportunity for us. And we've done this in partnership with some of the emerging players that are out there. And so we're not -- it's not very capital-intensive inside the house. We're not capturing an MSR today, but we're asking all those questions about how we continue to scale. And then obviously, when we think about the point-of-sale space, it continues to grow year after year. And so we saw Ally Lending as being a unique entity, a Charlotte-based company largely focused in the health care space and in home improvement. And so we've been outscaling that business as well. But I think Jenn and I could easily see that business doubling in origination size over the next couple of years. The one business I haven't really talked about, our Corporate Finance business now, that's up 15% this year. We're closing in on $10 billion of loans there as well, and that's been another nice niche, very smart seasoned operators running that business as well with very low credit deterioration seen during this unusual time. And so for us, the bank continues to grow, position scale, both on the consumer side, but also some of these neat little adjacent products as well. And again, back to Fair Square, we think having a credit card offering, all-digital, focused in the prime space aligns with -- really well with our auto and deposit customers. We think that's going to be a nice growth engine there. It's roughly under $700 million in assets today, and I think you're going to see us scale that business up quite a bit.

Maybe just building on that question. So you've obviously been able to build dominant share in the auto business given some of the advantages that we talked about earlier. And now you're working to build scale in some of your newer platforms. You talked a little bit about some innovative partnerships, things like Carvana and Vroom and the like. However, we are seeing lots of fintechs entering different parts of the digital direct banking ecosystems. And -- are there parts of your business that are being impacted? And can you maybe talk about some of the things that Ally is doing to stay ahead of the competition?

Yes. I mean, this was -- I was in Washington for 3 days last week. And certainly, this is a hot topic that's out there, the evolution of fintech. Yes. This sort of cuts both ways. Regulation is really good in terms of consumer protections and safety and things like that. And I think we're yet to see where this plays out in the fintech space. But still today is very unregulated. When we look at fintechs, and we spent a lot of time studying everyone that's out there, and we try to focus on what are they really good at and what are their ways that they can, these intermediate banks. And I think what we see, they're really good at customer acquisition. They're really good on front-end technology. I think the back-end and the ultimate servicing of customers remains to be seen. I saw some stats last week. It said 70% of PPP fraud was committed out of fintechs, okay? So this has a long way to go. But I think we have opportunities, and what we try to do is learn around our own interfaces, and not just from fintechs, I think from the best digital companies that are out there. When our team and Diane Morais and her teammates go out and benchmark, they're benchmarking against Amazon, Spotify, Domino's Pizza. So we're trying to learn all the ways like how do these customers -- or how do these companies effectively serve their customers, create a deeper moat using great integrated technology, and that's what we're trying to do at the bank as well.

One of the big topics that's been talked about at the conference has been the impact of -- the potential impact of rising interest rates. And Ally's balance sheet and its ability to withstand rising interest rates has been a big topical point that I spent a lot of time talking about with investors. Can you walk through NIM and deposit beta expectations as Fed funds begin to increase? And how do you expect to perform this time? As we get to terminal interest rates, obviously, that's a huge debate what level that is. And obviously, that's ways off. But how do you see that comparing to what we saw last cycle? Obviously, the funding structure has changed a lot. And can you maintain a moderate asset-sensitive profile through the rising rate cycle?

Yes. So -- and I would just say, I'm not sure a higher-term structure rates is really as far out as maybe some believe. I think if you look at some of the commentary that came out last week, seems like the Fed is gearing up for more action in 2022. I think beta cuts both ways. And so obviously, we look at it on the auto side and what's our ability to pass on. And so 7% new originations for 4 years in a row, powerful stat. But we think there's more to go there and without really changing our credit profile. So we think back to the point, a normalized term structure, we think that [ 6 80 ] portfolio yield could be closer to [ 7.5 ]. And then on deposits today, it's a very different base than we were at, call it, 5, 6, 7 years ago when you were still in this dramatic growth mode. Now we're in optimization mode. And so can we pay the same deposit rates forever? Absolutely not. We'll have to reprice up. But I think deposit betas are going to be slower probably than most believe. And so -- and Jenn and her treasury team, our -- generally, our view is to keep the balance sheet fairly interest rate neutral. And the nice thing about when you generate this amount of loans every year, your balance sheet is constantly churning. I mean, $46 billion of new originations this year, we'll amortize in the neighborhood of, call it, $33 billion, $34 billion as well. So you have net absolute growth, but the balance sheet moves pretty quickly. So that helps keep your kind of your neutrality to a move-in rates.

So one of the things that I think is underappreciated is just the natural hedges that you have in your auto and your digital bank platforms. And you've really positioned the company to benefit from both near-term and intermediate-term trends. And I think you've been clear that your 15% ROTC, 15% or 16%, as you talked about earlier, embed some normalized assumptions. Can you maybe just walk us through the pace and magnitude of normalization you're expecting? And as we said, could returns be better than that for a second -- for an extended period of time? And second, could your recent acquisition help push returns higher over time?

Yes, yes. We certainly think so in that regard. But yes, I mean, let me just start with credit. Obviously, again, we'll finish this year with auto NCOs in the neighborhood of 35 basis points. It's not going to gap to 1.4% to 1.6% overnight, so that is going to be a slow normalization. Do we expect credit losses to increase next year? Absolutely, but I think we're going to way outperform the 1.4% to 1.6%. Lease games were obviously a big driver this year. We would expect some normalization there next year. But again, at the same time, Smart Auction and the flows that we're seeing in our online auction platform, we're up 35% in revenues from 2019. So it will be a slow normalization on what we see in lease gains coming off. I think the balance sheet still has a number of strong structural tailwinds that we talked about. And I think Jenn and I would tell you, the NIM well into the north 3% range is going to continue for some time. So we feel really good. We're mindful of things normalizing. And then we're also mindful of just -- it's a challenging environment in terms of trying to hire people today. And so I think all -- every industry is struggling with rising costs of compensation and bringing employees, and a lot of employees that have just elected in light of COVID, "I don't want to work anymore." It's been pretty fascinating dynamic. So we think we're well positioned. Again, I think the 16% to -- 15%, 16% ROTC range, we feel extremely strong about. Now is there upside? Absolutely. I think we've got to integrate Fair Square. We've got to see that business scale up, and that certainly should add a point or so to ROE expansion as well.

You talked about both credit and lease gains, both which are being driven by really elevated used car prices, which are expected to be up 30% this year. I think you and Jenn have talked about them coming down 5% to 10% over time. Can you just talk about what are some of the assumptions that are embedded in this? I think we all just assume they're going to come down, but there's obviously tons of dynamics. And can you maybe just talk about some of those dynamics that could impact the pace and the magnitude of decline?

Yes. So I mean, we'll be out here. And obviously, we'll guide to a decline in used car prices. But I think what we continue to see is a very tight auto market right now. And dealers, we're seeing just a touch -- in the past month, a touch of floor plan starting to rise. But inventories are still extremely, extremely tight. And in some of our big dealers, Hendrick Automotive, big -- Sonic Automotive, big players like that, I mean, they're presold on new cars coming in for the next 4 or 5 months. So we think things are going to be tight for a while before you start to really see structural change there. And so obviously, that ends up being very supportive, and used cars ends up being a natural hedge to some degree against the commercial loan book that's going to continue to run lower. And inventories today are kind of running 20 to 30 days. We don't want to see those get back up to 90 or 100, but there's a sweet spot somewhere in between where more cars can get on dealer lots.

And maybe to just round out 2021 performance, which has been record-setting, and we'll get the final numbers in January. But can you maybe just round out expectations ahead of year-end? Give us some color on what you're seeing as we move through the fourth quarter from a growth, credit and revenue and expense perspective. Obviously, you talked about things like deposits coming in really successfully. And you talked about 32 basis points of charge-offs. Can you maybe just round out some of the other puts and takes for the quarter?

Yes. So origination flow continues to be really strong, somewhere in the neighborhood of, call it, $11 billion-ish of new paper will come on this quarter. So that's sort of consistent with that $46 billion in annual originations. PPNR in excess of $4 billion, I think Jenn has done a great job of really trying to get investors and analysts to focus more on that PPNR line item, and so we'll be well north of -- or north of $4 billion there. Tangible book value per share in excess of $40 a share, their revenues well over $8 billion. That's been a big focus of the company. I mean, again, we are one of the unique stories out there really seeing increases in revenue. So I'd say fourth quarter is going to continue to carry the nice consistent trends that we've seen throughout the course of this year, so it will be a good finish to the year.

A couple more topics that I wanted to hit on, and I was hoping to maybe switch gears to capital and capital allocation. You're wrapping up your $2 billion buyback plan, which is the largest one you've ever done. You increased the common dividend by about 30% early in this year. You obviously just closed Fair Square and -- but you're still 150 basis points above your 9% target, with what sounds like a pretty strong earnings outlook. So can you maybe just walk through your capital priorities from here? And how do we get back to 9%?

Yes. I mean, I think you should expect a continuation of a strong buyback program, similar-sized ZIP code. Ultimately, we'll talk about that with our Board to wrap up this year and into January, but I think similar-sized scale of a buyback program. Dividends remain of high importance for us. And so I know Jenn and I would like to see the dividend inch higher early next year and throughout next year as well. And then obviously, supporting organic growth. That continues to be a major priority for us. And again, we're seeing the balance sheet grow. We're putting on good loans. We'd like to deploy capital in that regard. I don't think you should expect any type of special dividend or something like that. We recognize we are running hot right now. But obviously, there's a variety of factors that we have to navigate. We'll go through the CCAR process next year. And as you've seen, Ryan, we'll be as aggressive as we can in positioning the company through that process.

There was a lot of, I would say, anxiety post the CardWorks deal, a handful -- which seems like a handful years ago, but wasn't really that long ago. And I think the messaging had pivoted back towards there was going to be a consideration to you guys doing an acquisition. And I guess, why do you feel the deal that you did was the right one for you? And what are your expectations in terms of growth, particularly regarding your ability to sell across your broader customer base? And I think the last time we heard from you, you said acquisitions are a lower priority from here. Do you feel that you have all the right pieces in place now? Or do you feel we need to see more deals on the come?

Yes. I think for us, we've got the pieces in place. Obviously, you never say never. You have to stay opportunistic and open, but I think we've done a nice job now rounding out the product set. And we really like Fair Square. It was a company we had studied and looked at a few years ago. They were at a different point in their life cycle and their journey than they are today. And so strong digital player aligns in the prime space, a great team, seasoned operators. A lot of the guys running, gals running the company have kind of 20, 30 years of card experience. And so it's a great team, and it's a great pickup. And I think that's sort of -- for us, we've said that growing in the unsecured space was an important priority for us. I mean, a, it helps introduce some more risk content on the balance sheet, which, candidly, we think we needed to. It's a higher ROA product. And so we're excited about the ability to cross-sell this product with both our auto and deposit customers. And the team is already well underway with integration. I can promise you that. And I would expect shortly after the turn of the year, we'll be rebranding under the Ally family. And this is an exciting growth space. But I think for us, right now, that kind of rounds out the product set. And now the message Jenn and I are really delivering inside the house is one around continued optimization and much more the organic growth story.

We're getting close to the end here, but anything regulatory-wise you're focused on? You obviously are actively involved in this. We know -- we're starting to get a picture of what the Fed is going to look like. And obviously, we've had confirmation of the CFPB. What's the tone and thought of the regulatory landscape today in your view?

Yes. It's -- I mean, it's not easy at all. There's a lot of intensity across Washington right now. Obviously, seeing stability with Chair Powell we think is a good thing. But even inside the Fed, you're going to see a shifting landscape there with ultimately a new Head of Supervision, a new Vice Chair in the role there, and so it's an evolving landscape. I think consumer protections remain a high priority across all institutions. And then other things that I think are getting a harder look at right now are things like crypto and things like non-bank fintechs and the unregulated space I think is going to get a harder look next year.

Maybe just in closing, obviously, the stocks had a good run this year, but continues to trade at a discount. Any message you want to leave investors with in terms of either what they're missing? Or anything else that you wanted to highlight?

I mean, I think, again, back to where we started, strong scale, dominant positions in auto and banking, and still a tremendous amount of earnings runway. I think what Jenn and I had proven, our Board has proven is we do what we say we're going to do. And hopefully, that's established credibility. So we don't like to come in and deliver a message that we can't deliver on and we can't exceed, and I think you'll see that continue. But we feel very confident, the earnings trajectory, the runway of the company. And 2021 was a good year. We think 2022 can be even better.

Great. Well, please join me in thanking J.B.

Thank you. Thank you all. Thanks, Ryan. Appreciate it very much. Thank you.