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

Okay. Great. Welcome, everybody. And as I mentioned in earlier presentations, we're really glad to be back here in person and extremely glad to have the management of Ally Financial with us. Ally is a leading auto finance company. I think what's been most interesting to me is while the company now targets a return on tangible equity of 16% to 18%, which is higher than the company had been earning pre-pandemic, but what really has resonated with me is this idea that they've been able to do -- achieve strong growth at really good risk-adjusted margins. And I think has also, as we came out of the pandemic, showed very good discipline on expenses. So we're here with Jenn LaClair, the CFO. She has joined Ally in 2017. Before that, was at PNC for 10 years and had done other stints in consulting and other things. But Jenn, we're really glad, like I said, to be here in person, and we'll just jump into fireside chat. So as I mentioned, Ally is now significantly more profitable than it was pre-pandemic. So maybe talk to us a little bit about what you see the evolution from here. What comes next?

Yes, sure. Thank you, Moshe. I appreciate hosting us and very nice comments, and it's great to be back in person. So a couple of things on our strategic evolution. I think it sounds simple, but we really start with a relentless focus on our core values and delivering for our consumers. If you look at 2021, we achieved 10.5 million customers across the Ally ecosystem. We've grown for 51 consecutive quarters in our Ally Bank platform. We've grown our multiproduct customers every quarter since we started tracking the metric. And on the auto side, we've eclipsed 21,000 dealers continue to find robust opportunities to grow, including our highest ever application flows and the highest origination flows that we've had in 15 years. So Moshe, it really starts with that focus on the customers. That obviously is driven by our 10,500 employees who continue to be some of the most engaged in the industry, and that really matters, especially in a tight labor market like we're experiencing right now. 3 years ago, we launched a program to make every single one of our employees, a shareholder. And we just completed our third round of Own It grants. It's a great way to align our employees to the mission and purpose of Ally, and then it also allows them to share in the success of the company, and it's been just a terrific talent attraction and retention tool. And then communities is a very big focus, especially as you look across ESG initiatives, and it's been in our DNA since we started the company. In 2020, we started an Ally Foundation. We've rapidly moved to fund the foundation. In fact, we donated over $50 million to our foundation in 2021, and it creates an efficient method for continuing to contribute to our communities economically over time. And then just from a performance perspective, I'm really proud of the progress that the company has made since our IPO 7 years ago, Moshe. You'll know this because you've been tracking us for that long. We have hit every single financial guide that we've provided in the last 7 years. And I feel like the guide that we've provided just recently, just as good and well positioned as I ever felt in my tenure here as the CFO. So a really bright future ahead. That being said, while we're proud of the progress, we're never going to get complacent. We have a lot of work to do to continue to grow, to continue to scale and drive profitable growth across every single one of our businesses. And I know we're going to get into each of the business areas, but we see a lot of pockets of opportunity as we move forward. So Moshe, maybe to sum it up, it's that relentless focus on our values and delivering consistently for every stakeholder. It's continuing to find pockets of opportunities to differentiate and grow profitably and it's to deliver our financial obligations and our guide going forward.

And I think that when -- obviously, when the pandemic began, it was not -- the outcome was not to -- thankfully, the outcome was significantly better than what everyone was afraid of. And that contributed to 2021 being a year of peak returns above your guide. But now you've got this out there. So can you talk a little bit about some of the things that could provide upside to the way people are looking at the results in 2022?

Yes. I appreciate that. And 2021 was an out-performance year. And I'll just start, Moshe, by saying, I am totally unapologetic about outperforming in 2021. It built cash, capital. You can see we're using that appropriately to invest in the business and the future trajectory of the company. It supported a healthy buyback program, and it's helping to support an increase in our dividend as well. So we're going to continue to look for ways to outperform. This notion of peak, we are aware of that. We've been aware of that. But I'll just say, as I look into the future, we haven't peaked on the vast majority of our operating and financial metrics. We haven't peaked on customer growth, balance sheet, NII. We're going to talk a lot about NIM. We have a NIM expansion story that's unique across the industry. A lot of opportunities to grow other revenue, PPNR, book value and certainly not market cap. We have absolutely not peaked on market cap. So I want to put that peak notion in perspective for everybody. And then we think it's important to be managing for the long term. So we put a metric out there that 16% to 18-plus percent because we think a view into normalization is what really matters here. Now the path to normalization is still up for debate, and I think you're probably going to hear as many perspectives as you're going to talk to CEOs and CFOs over the next day or so, and we'll take advantage of those opportunities, but the focus really is on that long-term sustainable return, which we have a tremendous amount of confidence in. Now we gave a range of 16% to 18-plus percent. I think as we look at the trends out of the gate here in 2022, not surprisingly, Moshe, to your question, we're on the 18-plus percent side of that range. And it's all the drivers that we've been talking about for some time. Used vehicle values have continued to outperform. We don't model that used vehicle values are going to persist at this level. I mean it's -- these are historic highs. So we've modeled that they come down. We're seeing really persistent used vehicle values here in January, and we could potentially be up or, at a minimum, flat on used vehicle values in 2022. I will remind everybody that the dynamics in our lease portfolio have changed quite a bit. We have changed depreciation rates 3 times. We've also seen lessee and dealer buyouts accelerate, especially at the end of 2021. So 85% of our off-lease vehicles are going either to the lessee or the dealer. So all of that has muted our ability to take gains in 2021, and will so -- we'll do so in 2022. But net-net, outperformance opportunity on used vehicle values. Second, I know we're going to talk more about credit, but we are seeing with higher used vehicle prices, lower loss given defaults. And so that helps as you think about NCOs. Delinquency rates are running 30% below 2019 pre-pandemic levels. So as we're seeing normalization and normalization is occurring, but the pace of that from this low starting point could give us some additional tailwinds this year. And then last but not least, we have an insurance portfolio that has allowed us to take capital markets gains opportunistically. We had 2 outperformance years in 2020, 2021, you'll all know this as portfolio managers, in times of volatility, you can harvest attractive gains. We've done so over the last 2 years, we'll continue to do so. But obviously, we wouldn't model that into the guide. So I would just, Moshe, continue to focus on the long term. That's what matters in the near term, a lot of tailwinds, and we're heading towards more of that 18-plus percent return.

So in that context, it's become certainly this quarter, the concept of generating positive operating leverage has been even more important for investors. So -- and would be important in any plan to sustain high returns over a long period of time. And I think you had very, very strong operating leverage in 2021. I think the plan is for that to continue, given some of the comments you've made about net interest margin. Talk about how that fits into the financial plan in 2022 and beyond.

Yes. And maybe I'll start with our philosophy on operating leverage and then get into some of the nuances. But we do not manage the company line item by line item in a point in time. We're managing our capital, our cash and allocating that for long-term accretive returns. So I just want to start with that. That being said, we get that revenue needs to grow faster than expenses. And if you look at our PPNR has doubled since 2014. To your point, Moshe, we just delivered 17% positive operating leverage in 2021. So we get it. It's very important. And if you look at 2022, we do have on a stand-alone basis, robust positive operating leverage if you adjust for some of those outsized revenue gains that we took in our insurance portfolio this past year. So we feel good about that. We also have Fair Square that's integrating. You recall, Fair Square is immediately accretive to ROTCE. It's accretive to EPS as we start to exit the J-curve at the end of this year, and then it's fully accretive to operating leverage as we head into 2023, but there are some dynamics here in 2022 as we bring a new business into our portfolio that's really still moving through the J-curve. And then to the point that you made earlier, Moshe, we are a growth company. And so we are looking to continue to grow. We want to grow at accretive returns, which is why we have a robust guide out there on our ROTCE. But we're going to keep investing in our businesses. We have momentum and pockets of differentiated opportunity across every single one of our businesses. We see an opportunity to continue to invest in our brand. Hopefully, all of you saw our brand campaign in the fourth quarter. If you haven't, take a look at it. I think it's one of the best in the industry. And we're going to continue to invest in brand, technology, cybersecurity as well as continuing to see growth -- variable expense growth because we are scaling especially some of our newer businesses.

Probably a good segue to talk a little bit about Ally Bank and what it brings to the company from a brand and financial standpoint. And you've really done a tremendous job, you alluded to it in the first question about the growth in the deposit platform. How do you see that in this tightening cycle? Like do you see deposit betas being similar to the past tightening cycles faster, slower? Can you talk about it and how will it impact your NIM?

Yes, sure. And let me just clarify that our NIM guidance is upper 3%. And I think that is the headline here. We have a very clear path to generating that upper 3% net interest margin. And Moshe, to your point, it is largely driven by transformation on both sides of the balance sheet. On the liability side, we've been growing our deposits for 13-plus years. Every single year and every vintage has had high retention in the 96-plus percent. We've now achieved core funding in our deposit portfolio, which has allowed us to roll off expensive unsecured debt. We've rolled off over $24 billion in unsecured debt at a 5% coupon. We've early termed the FHLB. We redeemed our TruPS this year. We terminated our demand note program. So with the growth of our core funding and deposits, we've been able to structurally lower the cost of our funds. And this is a permanent change, right? We are starting at a lower level. As rates rise, we would expect the overall rate paid to be lower this cycle than last cycle because we're starting at a strong pricing position with stronger pricing power. And that's going to really help to propel that NIM expansion. Now I will say, because we're starting at a lower pricing point, OSA is 50 basis points versus last tightening cycle 100 basis points, there are some scenarios, and we've run multiple scenarios, which have a higher beta in this tightening cycle than in past cycles. But even in those scenarios, because of the structurally changed balance sheet and the better mix, we still achieve that upper 3% NIM guide that I've been sharing.

And maybe turning to the other side of the balance sheet, and I alluded to this in my intro, I think that you've had really, really good ability to generate high origination yields and not to put credit aside because they were good risk adjusted -- they were very strong risk-adjusted margins also. But given where you sit right now in terms of looking at the yield, the components, on the retail auto portfolio as well as floor plan. Can you talk a little bit about the yield side of that equation?

Yes. And I think it's really important to look at both sides because both sides are really driving the momentum that we see. And we've structurally changed our -- the asset side of our balance sheet, starting first with retail auto. That's now a higher percent of our portfolio. So the mix is better, that's higher yielding, higher return. We see a lot of opportunities to continue to originate in retail auto. In fact, we'll have another $40-plus billion year this year with our fifth year in a row of yields coming on the books over 7%. And so as that continues to grow and continues to be a strong part of our portfolio, we're going to naturally see our portfolio yields migrate up to that 7%. Especially as rates rise, we have some pay-fixed hedges on the books. We've been preparing for rising rates, and those will move in the money, and we have kind of 20, 30 basis points of tailwind simply because of the hedges as well as lower prepayments. So great momentum in our retail auto book. Commercial, that has been lower. We're expecting it to be lower for longer. We'll see some modest improvements there. I'm sure you've heard a lot about supply and demand dynamics in auto, that is persisting this year. But keep in mind, as we're growing that portfolio, it's a 100% floating rate asset. And so as rates rise, we'll continue to see floor plan come up. We also have unsecured products. I know we're going to talk about growth in Fair Square as well as Ally Lending. As we scale up those businesses, those are yields in the 15% to 20% range, and they're also floating on short duration, so they're going to help guide that NIM up. And we've got prepayments coming down in our mortgage portfolios and securities portfolio. So really, there's momentum across every single portfolio on the asset side of the balance sheet. And net-net, when you sum that all up, we're moving towards a 5-plus percent earning asset yield as we head into 2022 and beyond. And again, the punchline here is with all of those structural changes, the better mix, the better return profile of each of our businesses, we see a very clear path to that upper 3% net interest margin.

You alluded to some of these things. But in terms of the loan growth that you've seen, dealer floor plan has been down, but every other portfolio has grown. And I think you've set a target of about $200 billion asset size which is roughly $20 billion from where you are. Any thoughts about what's going to be the biggest contributors in that growth?

Yes, sure. And just as a reminder, we've been steadily growing our company and continue to see a robust path. And in fact, since 2014, we've grown our asset base over $30 billion. And in the fourth quarter, we actually had the highest linked-quarter loan growth that we've had in over 5 years. So not only have we been growing consistently, we're seeing really strong momentum heading into 2022. A lot of this is reflective of an incredibly strong auto asset class. Auto has, by the way, always been strong, but especially through COVID, it's reinforced the fact that personal ownership of an auto is at the center of consumers' lives, whether that's procuring a job, maintaining a job, driving your family around. It's had an extra health benefit as we've come through COVID. And we really see an opportunity over time, not just now but over time to continue to originate that $40-plus billion range in retail auto. Commercial, talked about, will come back. Inventory levels started to pick up in the fourth quarter with Stellantis and GM catching up a bit on production, but that's going to take a long time. There's still freight issues, ship issues and strong demand, quite frankly. It's hard to keep up with the inventory simply because of the strong demand. We've estimated there's some 4 million to 5 million customers on the sidelines simply because the make, model, feature function that they're looking for is not available right now. So that will provide a long tailwind not only to grow our loan portfolio, but also our lease portfolio. And then as we move on, we have a lot of newer products, right? We are just getting started in mortgage. A couple of years ago, we were $100 million in originations. We delivered $10 billion last year. And even as we shift to more of a purchase market, we see robust opportunities simply because of the strength of our platform, our ability to take share, and we've been expanding into new geographies as well. Ally Lending has been a really exciting portfolio, we acquired that. In 2019, we had some $100 million, $200 million in originations. We've grown that portfolio to $1 billion and see a clear path to $2 billion to $3 billion. Similar story on Fair Square just acquired them. But in 5 years, they've scaled up. They'll eclipse $1 billion in short order here and see a really strong path to $2 billion, $3 billion. And keep in mind, they were growing that portfolio even in a period with some of the highest payment rates in credit card. So we feel like the shift in payment and consumer spend at card, which is up kind of some 20% from pre-COVID levels will provide some additional tailwinds on our card portfolio. So hopefully, this is giving you a flavor. But essentially, net-net here, every single portfolio is thriving, has opportunities for growth. And it's not just growth, it's growth with expanding yields.

And when we think about the auto business. You mentioned $40-plus billion in originations. The cross currents that you're seeing right now, you've got these supply issues, the dealers, can you talk about what you're doing to -- because it does feel like you're taking market share in that? And what is it that Ally has been able to do to get that origination level and keep it?

Yes. And I think this comes back to the transformation, the strategic change in how we've managed through auto. We used to be a super prime sub-vented originator. We've moved now and diversified across dealers, diversified across credit and product. And now we are the #1 prime lender, which generates a much higher return. And we have a strategic moat in that space simply because it requires significant scale. We have invested heavily in servicing technology, digital capabilities. In fact, our digital engagement with delinquent and customers we're servicing is at the highest levels it's ever been. We have 2,000 employees that work in our servicing area, and we've continued to invest in that space. And so because of the unique nature of prime commanding higher returns, requiring scale and the breadth of products, we offer insurance. We have a SmartAuction disposition engine. We have ClearPath, Clearlane. Because of the strength of our product set as well, we continue to have the strategic moat. And it creates barriers of entry, quite frankly, that we found to be very opportunistic for us as we've come through a very, very strong auto market.

Okay. I'd like to talk a little bit about credit. Obviously, the combination of a period of time where consumers got a lot of cash, auto values are high, your loss severity is low. You're coming off that. But the -- I guess talk to us a little bit about how that normalization will manifest itself. What aspects -- what are you seeing right now in terms of trends, in terms of delinquency? And how does that make you think about the loss guidance that you put out, both for 2022 and how it's going to phase in beyond that?

Yes, sure. And credit risk management, as you can imagine, is a top priority focus of our company. And I talked about the $30 billion that we've grown in assets since 2014. And every single one of those years, we've managed losses at under 100 basis points. So we take credit risk management incredibly seriously. As we look, in particular, at retail auto, which drives the vast majority of our credit risk, we've guided towards normalized levels of 1.4% to 1.6%. We expect that -- at least we've modeled that normalization to be fairly linear with under 100 basis points in 2022 and then normalizing 1.4% to 1.6% as we head into '23 and '24. Moshe, as we just talked about, used vehicle pricing continues to be very robust. That is going to help on the loss-given default as you think about the NCO trajectory. No doubt that has been fueling a lot of our outperformance in '20 and '21, and we would expect that to continue with elevated used vehicle pricing. On the frequency side, our delinquencies, as I mentioned, are 1/3 below where we were pre-pandemic. We are seeing those start to tick up and start to normalize, and we would expect them to normalize, but we're off such a low base, and we're still seeing really strong consumer balance sheets. Spend has increased, but balance sheets are still strong. Payment activity has continued to be strong. And so we -- to be determined exactly that pace, but there could be some outperformance in some slower migration as we get to those normalized levels. Now above and beyond that, we haven't been complacent around credit risk management. We have doubled down on our investments in digital capabilities, in human capital, in data and analytics around our portfolio to make sure as things normalize, we are more than ready to take on that increase in credit risk then or at least increase in loss levels and frequency that we're expecting. We were one of the few servicers that during COVID did not lay off human capital because we knew that coming out of the crisis when you need the people, they're not going to be there. And so we've continued to show commitment to servicing, to strong credit risk management. We feel really well positioned around that going forward. Now the last thing I'd say, and I think this is really important as you're thinking about your models is we have robust reserves. So in retail auto, post CECL, we had a reserve of, call it, 3.34%. We're now at 3.54%. So some 20 basis points elevated in reserves. So that also gives us some added cushion and flexibility as we potentially head into choppier waters either from a macro perspective or a consumer payment perspective.

Are there any kind of trends that you would see in any pockets of your portfolio that are different than the total, if you will, that are worth calling out?

Yes, we have this conversation all the time when we look at every segment down to -- we can track it down to the loan level. And at this point, Moshe, we're really not. I've heard some chattering across the industry on subprime, that's nonprime. It's a pretty small percent of our portfolio. And right now, we really see some modest delinquency pickup and normalization starting to happen, but it's pretty uniform across the book at this point.

So in the past, you've talked about your insurance business. And how do we think about that business in the current environment? Obviously, dealers have fewer cars on their lots, but talk about your plan for that business in 2022 and beyond?

Yes, sure. And I think insurance is one of our most undervalued businesses inside the 4 walls of Ally. It has incredible synergies with dealer distribution. So think about a consumer comes in, especially now they're making one of their largest purchases. And we have the ability in a very seamless, frictionless manner to help protect their vehicle from high maintenance costs as well as potential [ GAAP ] shocks down the road. And so it's a great product for the consumer. We make it very easy to both procure and pay for insurance. You look at the dealer and this is a differentiated product for our company. Not many lenders can provide both the loan and the insurance opportunity. And on every unit of vehicle sold, it accounts for about 1/3 of the profitability for the dealers. So think about increased access to revenue as well as diversified income for our 21,000-plus dealers. And then for us, in a bad weather, bad claims, bad capital markets year, it generates 20, 25-plus percent return on tangible common equity. On a good year -- so think about '20 and '21 when we had some of the lowest losses -- weather losses in our history as well as strong capital markets, we generated an over 40% return on tangible common equity. So we love the return profile of the business. It's diversified financially inside the 4 walls of Ally, because it doesn't have credit risk, right? So it -- and it provides this countercyclic access to capital markets and other revenue for us. And so from a financial perspective for Ally, it's a really strong performer. As we look forward, obviously, with lower inventory levels, our property and casualty insurance has run a little bit lower than usual, but we see a tremendous growth opportunity in F&I. Right now, we have about 4,500 F&I dealers, we have a universe of over 21,000 dealers. So we're really focused on increasing the engagement level of our dealer base and really turbocharging F&I sales into the future. So feel really great about that trajectory. I will say this was our fourth consecutive year of written premiums over $1 billion. We hit some of the highest profitability we've ever hit, and we have the highest portfolio at $6.5 billion in assets, which, again, allows us to capitalize on gains as we go forward.

You talked a little bit in the beginning of discussion about the digital bank and the various products. Let's kind of dig into that a little bit. You had strong originations, you mentioned Ally Home, Ally Lending, Corporate Finance and Ally Invest. Can you talk about -- a little bit about the momentum of the businesses? And are you getting to the point where there's actual synergies between them in terms of customer acquisition, like how do you think we should be thinking about that?

Yes. Yes, sure. And we talked a little bit about our deposit platform, which is the gateway to a lot of these other products. So let me just provide some highlights there. We have doubled our deposits since 2014, and we've grown our customers over 50 consecutive quarters. And so not only has that helped to optimize liabilities and lower cost of funds, it's also created a strategic growth engine for our company. So if you think about Ally Invest, Ally Home, 40% to 60% of the customers that are going into those new products are coming from our deposit base. So that is a very high metric. And if you look at our multiproduct customers, we're only at 9%, but we just started, right? We just started that about 20 quarters ago. And most banks financial services institutions are running at kind of 30% ranges in terms of multiproduct customers. So we have this huge range -- huge opportunity to continue to capitalize on a more diversified product set within the 4 walls of Ally Bank. You see that already in our mortgage growth. Ally Invest, when we purchased that company in 2016, we had $4.5 billion in assets today or at least as we exited '21, we're at over $17 billion. And in addition to providing fee revenue, it helps keep our deposits within the 4 walls of Ally. So as market volatility picks up, we see less outflows to brokers, and we see those flows into Ally Invest. Ally Lending, I hit on that already. I really think that, that's a nice growth opportunity for us, both from an industry. It's a large and growing market, but we have specific expertise in health care as well as home improvement, and we've seen really great pickup not only in merchants, but in the consumer balances that we've procured through that channel. So -- and as you think about this whole ecosystem, especially as we add card, we see opportunities to not only cross-sell from deposits to these other products, but from these other products into deposits into other areas. So I think a lot of momentum just in general around the total Ally ecosystem. And then the other thing I'd point out is not only are we growing, but this is helping to fuel that sustainable return. The deposits portfolio, the engagement of our customers in the deposit portfolio is allowing us to keep that cost of funds low, and it's also allowing us to generate accretive revenue, accretive earnings and accretive returns over time.

Great. And it's been very clear to see the momentum in those businesses. When you think about that, and a number of them have been added just in the last couple of years. Are there other products that Ally would like to add, how do you think about that? And at what point can it be -- can the focus be, fewer products added but more cross-sell within the base?

Yes. I mean I'll go back to where I started, which is we're not going to be complacent. We work in incredibly heavily competed markets. We're going to always be looking to add capabilities, but we're going to do it smartly, right? If you look at how we've deployed capital over time, it's largely been around organic growth. I just described the incredible organic growth story we have. So we can be really focused on that first and foremost. But we'll be opportunistic around add-on capabilities, digital capabilities over time. But we don't have to be in a hurry to do that. We have such a strong organic growth opportunity. So we'll be opportunistic. We feel really great about our current opportunities. We didn't talk too much about Fair Square, but that's been our latest acquisition. I think we feel really thankful to have such an experienced team come on board. It's cut years off our J-curve. Getting into the card space, we do think with consumers having unsecured underwriting capabilities is really important, no matter what format that takes and the team we brought on board has decades of card experience. They've created a great product that is simple and it's designed around a unique market, the prime market, which is largely underserved. And the best testament to that is the track record of the company over the last 5 years to scale the business to $1 billion in some of the toughest credit card growth environment that we've seen in years. So to sum it all up, Moshe, we feel great about organic growth. We'll continue to be opportunistic and really excited about Fair Square, our latest addition.

And when you think about Fair Square, I mean, you mentioned some of the things that distinguish their product offering. You've also said, and you mentioned this before that they will be accretive to ROE right away and accretive financially to EPS as you kind of get through the -- that initial curve of the growth phase that's in right now. What could make that better or worse than what you're thinking about? How do you think about the variability around that for the card business?

Yes. I think there's a lot of tailwinds. One is simply that payment activity has come down, right? Spend is going up. Card spend is up some 20% over the last couple of years. And they've been growing at a 60-plus percent CAGR as payment rates were up and spend was down. So I think we have some industry tailwinds which should further fuel the growth. Second, they were constrained by access to inexpensive cash, capital and brand. And that's all of the aspects of Ally that helps to turbocharge their growth, right? We have -- we're core funded. We have ample capital to grow their business, and we have a brand that can really help to accelerate that growth. And then last but not least, in that 10.5 million customer ecosystem that I talked about, there's a large opportunity to continue to penetrate with card. We haven't modeled any of that in to the numbers that we provided. So there should be ample cross-sell opportunity as we even harvest the 10.5 million customers we have within Ally.

Got it. So you talked about the strong capital generation, and this is a business that actually has generated quite a bit of capital, and you've been genuinely aggressive in terms of distributing that back to shareholders. You do still have close to $2 billion, I think, of excess capital by the numbers that you've kind of put out there. Can you talk a little bit about how you're thinking about that capital deployment as we go forward and you're moving towards your targeted 9% capital?

Yes, sure. And I appreciate you commenting on our generous capital deployment. But I mean, as we look at where we've been, we grew our balance sheet $30 billion over the last 7 years. We grew RWA, about half that. We more than quadrupled our return profile, and we've distributed $6.5 billion in capital to shareholders via buybacks and sequentially increasing dividend payments. And so we feel great about the balanced approach we've taken which is invest in growth smartly to generate those accelerated returns to grow book value over time, but also to be smart about share repurchases. I mean, look at where we trade. We still think share repurchases have a terrific return on capital, and we want to pay a competitive dividend. So I think what you see is what you're going to get in the future and it's continuing to just be really smart on growth. We're not going to be complacent about any opportunities to deliver for our customers, where I started this morning. But we're also going to be aggressive in terms of share buybacks and the returns we're getting from a share buyback perspective. And we are very fortunate right now to be in a strong capital position. It's one of the strongest we've ever been, and we've got about $2 billion in excess capital right now. And we're not in a hurry to deploy that. And I think what you've seen is what you're going to get going forward.

Well, that's great. We're almost out of time. We've got about a minute left. I would just say that I've been impressed with the -- hitting the financial metrics that you've talked about. As you kind of think back of what the company has learned, is doing better. Just any significant lessons from the pandemic that you would say this is going to make Ally a better company?

Yes, I do. And I think a couple of things I'd say. One is staying true to our values in a turbulent time has paid off incredibly for our company. I think we went out and offered some of the most generous forbearance programs across the industry. We were recognized and appreciated through customer loyalty, the relationships we have with our dealers and our consumers have never been stronger, and you can see the turbocharged growth that we've seen as a result of that. So we've learned above and beyond anything that, that core focus on our values is what's going to drive our company. And then second, it's focusing on the controllables, right? I mean we live in and we operate in an industry that's highly cyclic, but look what you can do through cycles when you execute. And that's what we've done every single year and how we've gotten to 20-plus percent returns last year, how we're guiding to a company of 16% to 18-plus percent return on tangible common equity from 4%. There's not too many companies that can say they've done that, and we've done it through rising rate cycles. We've done it through falling rate cycles. We've done it through macro shocks and that consistent focus on execution and the controllables is where we're going to go from here. .

Great. Well, we are now out of time, and please join me in thanking Jenn and her team for excellent presentation.

Thank you, Moshe. Thanks so much.