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

Great. Continuing the session. I'm very pleased to have Ally Financial with us up next. From the company, we have CFO, Russ Hutchinson. Russ, thanks for joining us.

Great. Thanks, Jason. Thanks for having me.

I guess maybe before we dive into details, it would be great if you could maybe hit on some of the macro themes surrounding Ally, including trends you're seeing in key businesses and maybe your top priorities to CFO?

Yes, great. No, that's a great way to start.

We could just put up the first ARS question as Russ answer, sorry.

Sure. So look, we have two market-leading franchises that we're really proud of, Dealer Financial Services and Ally Bank and I'd say they give us the combination of really great momentum on both the asset and the liability side of our balance sheet. On the asset side, we've taken a number of steps in terms of capital allocation, just to manage the mix of assets we've had. We've taken a number of initiatives on the pricing side, all directed around really kind of maximizing the returns on the business through capital allocation and pricing. On the Ally Bank side, on the deposit side of our balance sheet, we've gotten to the point now where we're fully deposit funded. That comes from 15 years of relentless focus is Ally's for our customers. And we're really proud of the fact that we've gotten to this level of kind of core deposit funding. It positions us really well to focus on optimization around our deposit base, focusing on our most engaged customers and really kind of taking our foot off the gas as far as it goes towards growth. And that just gives us more flexibility that we've exercised over how we price our deposits. So both things that give us a lot of momentum on both sides of the balance sheet that we're really proud of. Just spending a little bit more time on the dealer financial services side of our franchise, we're really proud of our 22,000 dealer relationships. Our relationships are deep. We've taken this opportunity where a lot of our competitors have been pulling back over the last couple of years, and we've really deepened and strengthened those relationships. We are on track again to attract 14 million applications. We did that last year. That's up from roughly 12.5 million applications 2 years ago. And that application flow really allows us to be selective and to really push price. And it's a direct reflection of the strength of our overall dealer relationships. We're leveraging those relationships on the insurance side of our business as well as we build out our other revenue. We've got great momentum with our -- within the F&I department of our dealerships offering our F&I based insurance products. And we've also got great momentum on the floor plan insurance side. We've signed up a couple of OEMs over the course of this year. And it's really helped us fuel growth on the insurance side of our business, again, driving that other revenue growth. So as I look at our two kind of market-leading franchises, I think there's a lot that we're really proud of. And as I think about our priorities as a company over the next few years, it's really just kind of continuing to build on our relentless focus on our customers, both on the dealer side as well as on the consumer side. It's managing our risks and it's just being really, really disciplined around capital allocation and expenses. I know we'll spend a lot of time here talking a lot about credit. Maybe before I go into that, just talk about our 15% ROTCE target, we're absolutely committed to it. As many of you know, credit has been challenging over the course of this year. We talk a lot about credit. We tried to provide a lot of transparency around credit, even quite frankly, when it highlights some of the difficulties that we have in terms of forecasting credit, we have adjusted our outlook on retail loan credit a few times this year, as many of you know, I'd say over the course of the quarter, our credit challenges have intensified. Our borrower is struggling with high inflation and cost of living and now more recently, a weakening employment picture. And so we're seeing that. All that being said, we're committed to our 15% ROTCE target. We'd admit that the road is harder and the time line to get there is longer. That being said, as a management team, as many of you know, we've taken a number of steps over the course of the last 18 months to really bolster the profitability of the enterprise. We've taken actions in terms of pricing and curtailment. We've sold our Ally lending business. We've deconsolidated nearly $3 billion of retail auto loans through the securitization markets. We executed our first -- first of, hopefully, many CRT transactions earlier this year. And we've taken significant actions just around curtailing, for example, our credit card business, moving our mortgage and our securities portfolio to predominantly a runoff and also taking actions on the expense side of our business. So we've shown that we'll take actions to make sure we lock in our mid-teens ROTCE target over time. And we acknowledge the road is harder, and we're going to have to do more, and we're committed to do that in order to make sure that we deliver upon that even in the face of recent credit challenges. So my guess is you're probably going to ask us to elaborate a little bit more on what we're seeing in terms of credit?

Go for it.

Yes. So, maybe before I kind of jump into the main event, retail auto, I'll just spend some time on some of the other credit portfolios or the other loan portfolio, so on the commercial side of the house, both commercial auto as well as our corporate finance business. We actually haven't seen any losses so far this year. And I'll knock on wood as I say that, we haven't seen any losses, those portfolios both continue to perform extremely well as we would have expected them to. On the credit card side of the house, as we pointed to elevation in NCOs middle of last year, we put a lot of curtailment in place. That portfolio is now stable and performing very much in line with the expectations that we said at the beginning of the year. And so we feel good about where we are from a credit card perspective. And then, as you know, we have a significant mortgage loan portfolio. It's very high quality. It's seasoned, also very well behaved. And so across the kind of non-retail auto assets, which is about $50 billion of loans on our balance sheet, I'd say credit is performing in line or better than our expectations. And so with that, let's turn to auto. And so as I said earlier, on the retail auto side, our credit challenges have intensified over the course of the quarter. In July and August, we saw delinquencies up about 20 basis points versus our expectations. And we saw NCOs up about 10 basis points versus our expectations. We're clearly dealing with a cohort of borrowers who have been struggling with cost of living and now are struggling with an employment picture that's worsened unemployment up approximately 50 basis points since the beginning of this year. In particular, we spent a lot of time looking at the late-stage delinquencies. So looking at 61-day plus days past due, and those delinquencies in particular, we're looking at because those reflect really kind of that pool of struggling borrowers. And as that pool of struggling borrowers in those later-stage delinquency buckets has grown, it gives us pause in that as we kind of think about that 10 basis points of underperformance on NCOs in July and August, our sense is that's probably going to expand as we come in coming months, just given the size of this population of struggling borrowers. And so that's really kind of one of the things that's put us on notice around credit development. Maybe what I'll do is just turn for a minute and talk a little bit about the vintage dynamics because I spent a lot of time talking about 2022 versus the '23 and later vintages. I mean maybe I'd start by saying kind of even with the credit trends we've seen in with NCOs trending 10 basis points above our expectations. As I look on a linked month basis, July and August, on a seasonally adjusted basis, NCOs actually came down. And I think that's a reflection of this rollover of the portfolio from losses driven predominantly by that '22 vintage to moving to the '23 vintage. And the '23 vintage has the benefit of a significant amount of curtailment, particularly when you look at the second half of 2023 is our level of curtailment basically progressed starting in the second half of '22, but then really kind of re-upping on additional curtailment in the first quarter of '23, and then we put in successive rounds of curtailment through the second half of 2023 as well. And so when we look at the two vintages from a delinquency perspective, 2023 continues to outperform 2022. And so that gives us some confidence around the level of curtailment we put in place and the actions we've taken so far. That being said, the 2023 vintages is contending with a different macroeconomic backdrop than with 2022 contended with at this point in its life cycle a year ago, right? The 2023 vintage was originated in a roughly 3.5% unemployment world, and we're sitting now at 4.2%. And so that comparison between 2022 and 2023 is going to get harder to make as 2023 deals with an increasingly difficult macro environment. But right now, as we sit here today, '23 continues to outperform even dealing with that macro environment. And so if I kind of turn to -- kind of the outlook and kind of how we think about credit going forward, maybe I'd start to say we continue to expect to benefit it, we continue to feel great about the curtailments that we've put in place. We are obviously taking a very close look at credit. A lot of the curtailment is based on analysis of very much at the segment and subsegment level within our portfolio, and we've taken a lot of actions in terms of cutting out segments that are underperforming while at the same time, repricing segments that we've stayed in. And we're going to continue that work and continue that effort going forward as we see these credit trends emerging. And so as I said before, our sense is just kind of given the buildup of late-stage delinquencies, you kind of given that 10 basis points of underperformance versus expectation that we've seen in the first couple of months of the quarter, our sense is that we'll see some underperformance going forward. We'll take a hard look at our reserves as we head towards the end of the quarter. Right now, just kind of given that delinquency bucket, I'd expect that we could see reserves move up. All that being said and in the face of these credit challenges, we still remain adamant about our 15% mid-teens ROTCE target. And there's a couple of things behind that. Number one, the loans when you kind of look at these recent vintages, they're underperforming our expectations in terms of loss in ROE, but on the other hand, they're still attractive loans. They're still written at risk-adjusted margins that are higher than what we wrote pre-pandemic, even with elevated credit costs. And so they're overall accretive to the ROE of the enterprise. And then number two, just as a management team, we remain committed. We've shown that we're willing to take actions and we're going to continue to take actions. As you can imagine, we're looking at every aspect of our businesses and really looking at them with the lens towards capital and expense optimization. And so again, notwithstanding the credit challenges that we're facing and notwithstanding the fact that we faced a harder road going forward, we remain committed to delivering on that 15% ROTCE albeit it's probably a longer road than we had entertained a few months ago.

I guess we started out the year thinking retail auto charge-offs for 2024 to be 1.9%. That number kind of progressively picked up by the end of the July call, you were kind of taking 2.1%. Kind of given what you just said, any kind of updated thoughts to where that figure ends up this year? And then kind of when do you kind of expect losses to peak?

Look, we're trying to be as transparent and kind of tell the world everything we know as soon as we know it. And at this point, July and August are 10 basis points up looking at kind of what's rolling through the delinquency buckets, we think that pressure escalates over coming months as loans kind of rotate through the buckets. Yes, I'd say we're going to -- obviously, we'll see how the quarter plays out and we'll come back in October when we report the quarter, and we'll probably have more to say in terms of kind of what we see at that point.

And you mentioned upward pressure to reserves. I realized you kind of calculated at quarter end, but maybe if the quarter ended today or kind of what are you thinking to maybe put numbers to that? How we should think about it?

Yes. I think we'll report that with the quarter. There's a process. There are a number of factors that get involved. And obviously, there are a number of constituents throughout the institution who will pine on it. My view just kind of based on what we've seen in terms of kind of what's in the delinquency buckets right now. My sense is up, but it's kind of premature to put a number on that.

Okay. I guess while charges have been trending higher, so as net interest margin, and you talked to this kind of 5 to 15 basis points expansion. I think you've kind of thought 3Q be the low end of that. Maybe just to expand on some of the margin dynamics. And the rate outlook has probably shifted since July, and just maybe talk to how you think that impacts your inventory trajectory?

Yes. So look, we continue to feel great about kind of the long-term drivers of NIM expansion. So you look at the portfolio repricing on the auto loan side, just as kind of you think about originated yields that so far continue to trend around 10.5% or above versus the 9.2% portfolio yield. There's just a natural gravitational pull upwards in terms of overall yield. At the same time, on the cost of fund side, we've been pretty forward-leaning in terms of taking pricing out of our deposit book, particularly on OSAs. And so we continue to benefit from lower cost of funds going forward. And so I think we feel pretty good about the medium and longer-term trends around that interest margin. Yes, that being said, as I've said before, the size and the ultimate pace of Fed cuts does affect us on a quarter-to-quarter basis. It doesn't change our view towards a 4% NIM over the medium to long term, but it does affect us in a particular quarter. So for example, back in early August, we saw a real shift in terms of the forward curve and kind of how the market was thinking about rates going forward. We went from a period where most of our questions were what happens if we're at 550 forever and we immediately pivoted to a world where at that point, the market was anticipating 150 basis points between now and the end of the year, that kind of size and pace of cutting would put some near-term pressure on our book. Ultimately, that pressure is over a quarter or 2 and then ultimately becomes a tailwind for us as our deposits reprice. And so maybe just to just talk a little bit about that kind of near-term pressure and how that works? We have about $60 billion of floating rate exposure through floating rate assets and hedges. That's -- think about that as an immediate 100% beta. So when you get those large shocks to interest rates, that $60 billion of exposure reprices immediately. Now that repricing kind of hits in the short term. In the medium term, it's overwhelmed by the liability sensitivity of our balance sheet. That is our large liquid deposits book, we'll reprice with a 70% beta. But over time, there's a lag between rates coming down and when we put in our changes to deposit pricing. We'll get to the 70% beta but it's not as immediate as it would be on a contractual floating rate asset or a hedge. And so large reductions in the Fed funds rate, large kind of rapid reductions in the Fed funds rate lead to near-term pressure on net interest margin. So it affects us on a quarter-to-quarter basis. But as you play that forward, that pressure actually turns into a tailwind as the true liability sensitive nature of our balance sheet materializes. And when you kind of think about it, so the size and the pace, obviously, if you -- easy to adjust -- easier to adjust to a 25 basis point cut and a 50 basis point cut at one go and easy, obviously, to adjust if the pacing of cuts is more gradual as opposed to concentrated within the course of a particular quarter. As we look at the forward curve right now, it currently prices in about 100 basis points of cuts over the remainder of this year. Whether that happens or not, I don't know anyone's guess. But if that were to play out, it would put pressure on our net interest margins certainly over the next couple of quarters, probably kind of lead us to a scenario where our NIM is kind of more flattish as opposed to expanding for the next couple of quarters. All that being said, of course, that NIM expansion and that trajectory to 4% NIM, very much intact as the deposit book reprices. It's just -- it takes a couple of quarters to get there. When I turn to third quarter in particular, you referenced the 5 to 15 basis points. We talked at the end of second quarter about just some of the pressures kind of limiting that NIM expansion for the third quarter. One of them we talked a lot about was just the overall level of lease gains. And so we had anticipated just based on the leases that we had outstanding that our termination volume would be lighter that would put a headwind on NIM in the quarter. In addition to that, I'd say lease gains came in a little bit soft. I mean, used car prices were overall pretty good, but just due to composition in terms of what was coming back from lease or lease gains were a little soft. So that put additional pressure on our NIM in the quarter. And so think about kind of the lease dynamic, putting 6 to 7 basis points of linked quarter pressure on our net interest margin. As a corollary to the credit discussion we just had in the buildup of those late-stage delinquency buckets, we've also seen pressure from nonaccrual loans, which is an interesting one and probably more significant than you might anticipate. So when a loan goes more than 90 days past due, we put it in nonaccrual status. We don't just lose the current net interest income on that loan. But we also write off the prior 3 months of interest revenue. And so it has a meaningful impact on our net interest income and our margin, ultimately during the quarter. And so we're seeing that impact us as well. Yes. And then another factor that's impacting us actually is OCI. So we've seen this great rate rally. It's probably reduced our OCI by about $600 million after tax, which is a good thing, but there's also a denominator impact. So as the securities portfolio gets written up, the denominator goes up, without an offsetting increase in net interest income. So that is also a couple of basis points of headwind on NIM. It's overall on balance, a good guy, but it is a bit of a headwind on NIM. And so taking into account a number of the headwinds that we have in the quarter, we actually see -- we've seen them declining in the third quarter as opposed to expanding. Again, it's a number of factors that hit us in the third quarter, some of which we obviously knew and talked about and some of which are kind of more kind of credit and market related. While that being said, we still have a lot of conviction around our 4% NIM trajectory, albeit we didn't knit that there's kind of more uncertainty around the timing of when we get there.

All right. So it sounds like, I guess, pointing to a sub 3% NIM for the third quarter.

No, not sub 3%. We were at 3.3% in the second quarter. So we're pointing to NIM declining from there. But we didn't see...

Got it. I guess maybe thoughts, I guess, if the forward curve plays out, guidance for the full year was 3.3%. I guess, how would you think about the trajectory given you'll have some kind of maybe catch up?

Yes. Look, I think we'll probably come through in when we report the quarter to talk a little bit more about guidance for the year. And obviously, there's a lot of variability within the quarter that's just driven by kind of what the Fed does in terms of the pace of overall cost. So we'll come back to that with kind of a little bit more information in October.

That's fair. Maybe talk a bit about the just overall balance sheet and just how we should think about that looking out? You're certainly growing certain parts of the business, retail, auto, corporate finance. Other areas, you talked about scaling back card and exited Ally Lending earlier this year. So just how do you think about the overall balance sheet?

Yes. Yes, we continue to look at the balance sheet within Iowa's capital optimization. And so you think about kind of flattish, a flattish balance sheet going forward, but within that flattish balance sheet, we continue to grow our retail loan portfolio. We'll continue to grow our corporate finance portfolio. those are both kind of relatively higher return assets for us and businesses that obviously, we've got real depth and real opportunity to win in. On the other side of that, we moved our mortgage business kind of to an off-balance sheet play at the beginning of 2023. And so we continue to see our mortgage portfolio run off. We've been making minimal reinvestment on our securities portfolio. And so that portfolio also continues to run off. And so we're in effect, we're kind of running off some of these lower-return portfolios, and we're kind of growing in areas where we get higher returns. Yes, I'd also say just within the auto finance business, we look at our dealer relationships really as relationships. And so we look at them on a comprehensive basis. And we're looking at the retail loan volume from the dealer a relatively higher ROE product. We look at how much commercial credit we have extended to the dealer, which is a relatively lower ROE. And so we're constantly looking to kind of optimize that balance between the kind of retail loan element of it and the commercial element. And then at the same time, obviously, trying to drive and continue the momentum that we have on the insurance side, which drives attractive kind of low capital consumption other revenue line for us. And so as we think about the balance sheet, it's really very much with an eye towards kind of how do we optimize for kind of getting the best risk-adjusted return for the enterprise. You pointed to cards from a loss perspective, cards has been relatively well behaved, very much kind of reflecting the amount of curtailment we put in. We are still very cautious just kind of given kind of what we're seeing in the macro environment, we're still taking a cautious view of that business. And so we certainly don't have our foot on the accelerator there in terms of growth.

Got it. And maybe can you talk about kind of some of the liability dynamics, maybe just auto yields have been certainly a bright spot. I think portfolios in the second quarter, 9.2%, recent vintages north of 10%. We did see a rally in 2, 3-year swap rates of late. Just maybe how we think about the asset yield they're looking out? And then you kind of talked about the 4% NIM earlier and just how does kind of reset dynamics impact when you think you could achieve that?

Yes. No, I think you're exactly right, kind of the -- kind of the core dynamic remains very much intact and that we're originating at yields that are meaningfully above our portfolio yield. And so we're still today kind of sitting at a 10.5% yield, a 10.5% plus yield at the same time that our portfolio yield is 9.2%. And so we feel really good about the margins on the loans that we're originating today. I think you're right to point out the swap curve. Some of our competitors will price their loans off of the swap curve and 2-year swaps in particular, have come in meaningfully over the course of the quarter. And so we do anticipate that we'll see some more of that competition. And that will play kind of different parts of the credit spectrum for specific competitors. All that being said, we continue to get great yields on the paper that we're underwriting today. And we continue to do that in an environment where we've got significant curtailment in place, and we expect to continue to put curtailment in place, but we are anticipating that there should be some pressure on yields moving forward. Yet, at the same time, we'll see some benefit in terms of our cost of funds because our cost of funds will come down as well. And so we can protect the margin as we move forward. I think kind of given what we're seeing on the credit side, we're still pretty cautious, but we will get through that. And as we get through credit and as we see positive development on the front book, we'll also look at places where we can start unlocking some of the curtailment that we put in place. As you know, as you kind of look at kind of the sum total of the curtailment we've put in place on the auto side, if you compare first quarter of '23 to first quarter of '24, we've added -- we've increased the proportion of our mix that goes towards our highest credit here by 10 percentage points, right? We went from you have 30-ish percent STR paper to north of 40% STR paper over the course of 2023. And we've added 12 points to our average FICO. We've lowered our LTVs. We've put a lot of curtailment in place. And as we continue to see favorability on the front book, yes, we'll look for opportunities to release some of that curtailment. That's certainly not today given what we're seeing in terms of credit. But as you think about kind of pricing and margin over the longer term, we certainly expect that we'll use that lever as we move forward as a way of protecting our margin and kind of locking in our path to that 4% NIM.

The other piece of guidance you've talked to is kind of fee income up 12% for the year, kind of tracking to that in the first half. Just maybe talk to, is that numbers still doable? I think insurance is probably a key driver of that work that in as well.

Yes, we're still on track with respect to that 12% other revenue growth for the year. As you pointed out, insurance has been a strong engine of that growth. Our insurance business is working very close with our auto business. You're really just leveraging the depth of the relationships that we have with dealers and as you know, we've gotten into a couple of new OEM relationships on the floor plan insurance side that have been really helpful in terms of building revenue on that side of the business as well. So we continue to feel good about that. We continue to have momentum with our SmartAuction product, which also adds to our other revenue line. So again, we feel pretty good about kind of where we are from an other revenue perspective.

And then I guess on expenses, I think the guidance for this year control, the expense is down more than 1%, up less than 2% overall. I guess maybe just talk to expenses. Revenue is going to be softer than expected, certainly for the third quarter, talk to any kind of offsets we see on expenses and as you begin to put together the 2025 budget with NIM entering next year to lower-than-expected clip, just how you're thinking about that?

Yes. No, it's a great question. First, as far as this year goes, we're still very much on track down more than 1% on controllables and up less than 2% on expenses overall. As you pointed out, with the growth of the insurance business, the great thing about the growth of the insurance business is, you get the revenues right away, you get the expenses right away. And so with the growth of insurance revenue, we also see growth in insurance expenses, and that's really what's driving that 2% overall expense growth versus the greater than 1% decline in controllable expenses. And just maybe just to focus on that kind of greater than 1% decline on controllable expenses. We've taken meaningful actions to reduce the expense levels across the organization. And so we're achieving that 1% while absorbing some additional costs around the servicing and collection just given what's going on, on the credit side of the portfolio and also a lot of investments that we've made that we've had to make in cybersecurity and kind of other areas on the franchise. And so we have taken real actions on expenses to achieve that controllable expense target and as you pointed out, as we kind of go into planning for 2025, we're taking a hard look at expenses across the organization. And similar to past years, we've kind of typically used kind of first quarter January to talk about kind of the coming year in terms of what we see in terms of the plan. And so that's certainly our intention this year. But obviously, given the trends we've seen in the business, you can assume that every aspect of our business is very much kind of under the microscope with a real focus on both capital and expense efficiency.

Got it. And then maybe on capital. You've certainly seen kind of a elite growth capital over the last several quarters. You referenced your first credit risk transaction earlier. Maybe how should we think about Ally continue to tap the capital markets and how do you plan to use this excess capital and maybe when you're thinking about share buyback and the like?

Yes. So look, while the specter of Basel III is out there, we're in capital build mode. I think we expect we'll start to get some kind of visibility around Basel III over coming days or weeks, anybody's guess. But as long as that's out there, we're very firmly in capital build mode. We've done a lot of kind of interesting proactive things over the course of the last 18 months with respect to capital, and it's our expectation we'll continue to do that. You mentioned CRT. We think CRT is a really attractive opportunity for us from a capital perspective and that it really gives us an opportunity to manage the capital load associated with a number of our retail auto loan assets, but maintaining, obviously, our relationships with dealers, maintaining our ability to speak for their volume. And so we really like the CRT and it's a capital markets transaction. It's kind of there when it's there, and we'll look to opportunistically use that going forward. We haven't committed to any kind of specific volume or cadence but it's certainly something that we expect to continue to do. And similarly, we use the ABS markets for deconsolidation, we'll certainly look for opportunities to deconsolidate loans as well. And then, of course, we're taking a hard eye in terms of just kind of what we're originating, again with an eye towards capital optimization and expense efficiency.

Got it. And then one of the things we have a question is on negative tax rate. The second quarter and your guidance for the year is flat to negative 5%. Clearly, EV leasing channel is a driver of that. Maybe just talk to kind of how that works your expectations? And just how do we think about tax rate maybe for next year?

Yes. It's a good question. I understand a lot of people kind of struggle with kind of how to think about that? How to model it? How to anticipate it? I guess, number one, I'd say we don't have any real kind of firm commitments around EV leasing volume. And so the actual kind of level of volume in a given quarter is going to kind of move around and I think that kind of makes the forecasting effort a little bit more challenging because on the one hand, the economics of EV leases are no different, but the P&L construction in terms of the timing and the placement of the economics are different, and so that makes it hard to estimate. The way I think about it is for a quarter where we do, let's say, $500 million of EV leases, you'd expect about $80 million of tax benefit. So I kind of model the rest of the business at an effective tax rate of, call it, 22%, 23% and then just take kind of the level of lease volume. And again, it's kind of that $500 million of EV leases, $80 million of tax benefits, and that's kind of how I would -- how I think about kind of modeling the tax rate as you think about us going forward.

Got it. I guess since the CFO, even say you've kind of been very consistent with this kind of mid-teens type ROTCE target, I guess can you maybe talk to Ally's ability to sustain that longer term?

Yes. Look, I think we continue to be committed to it. We acknowledge the credit headwinds that we're facing today. But quite frankly, even with the credit headwinds, we still just -- we look at the return on the loans that we're originating. We look at the return on the recent vintages and it's still attractive. We look at the net revenue dynamics within our business with the portfolio roll over on the auto side and with cost of deposits, and we look at, quite frankly, a lot of the actions that we've taken around capital and expense optimization over the last 18 months and also with the kind of an eye towards just kind of a continuation of that theme moving forward. And we feel 15% is the right target for the institution. We feel it's achievable. It is absolutely sustainable. We acknowledge the road is harder, and we'll have to do more to get there and that kind of puts some uncertainty around the timing, but we're absolutely committed to it. And we -- again, we stand by it as what we think is kind of the achievable, sustainable, the right target for the enterprise.

Got it. And maybe as we kind of come to a close, I mean, anything else you want to share in terms of how the quarter or the year is kind of shaping up?

I think you hit everything.

Great. With that, please join me in thanking Russ for his time.

Thanks, Jason.