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

Great. Next up, very pleased to have Ally Financial with us. From the company, Russ Hutchinson, Chief Financial Officer. Russ, thanks for being back.

Great. Thanks for having me.

We just threw up the first ARS question that we've been asking for all our companies. And Russ, while the audience is responding, maybe start with a big picture. Obviously, a busy first half of the year for Ally. And just as you sit here today, some of the actions you've taken to improve the financial results, kind of how you're feeling about the world?

Yes. No, it's a great question. We feel really good about the world. I mean, we've taken a lot of actions to make Ally simpler, a more focused organization and reduced risk. So we've exited noncore businesses. We've increased our capital position. We've improved our underwriting and our servicing. We've taken steps like the repositioning of our securities portfolio to reduce interest rate risk. And we've also taken meaningful steps to arrest the growth of expenses within the company, positioning ourselves for positive operating leverage going forward. And so we look across our core businesses, dealer financial services, corporate finance, the digital bank. We are focused. It's an exciting opportunity for us and for our teammates to deploy our resources against businesses where we have relevant scale. We have deep relationships and we have differentiated products and a differentiated brand. We have every reason to win in the core businesses that we're focused on today. So it's an exciting time for us, and we think we've gotten a lot accomplished in terms of positioning Ally for the future.

I guess maybe just maybe delve more into that. You talked about reducing risk, increasing capital. You've scale back mortgage, you've sold card. We've seen some expense improvements. Earnings were up quite strongly in the second quarter. I guess, is kind of all the kind of hard work behind you and now we're kind of at an inflection point and we can start to see the improvement in returns? Or how are you thinking about kind of the trajectory from here?

Great. I'm pleased to say that the results that we've been delivering show real progress towards our medium-term targets. They reflect traction that we've seen across our customer base across all 3 of our core franchises. So if you look at our dealer financial services franchise, we've had record application volume in the first half of this year. That reflects strong engagement among our dealers. We've translated that into strong origination volume, again, reflecting the strength of that franchise. Our corporate finance outstandings are up. When you look at our digital bank, our customer growth and our retention are strong. And so across all 3 of our franchises, I think we are demonstrating results in terms of moving those franchises forward. And it's translating into the bottom line as you see in terms of the improvement in our margins, the progression in terms of our credit, and again, just that discipline that we've exercised across our expense base. And I'd say when you look at our franchises and where we've chosen to focus, we've chosen to focus in large fragmented markets where we have a lot of opportunity for growth. And so I think we've done a lot. We've taken a lot of steps to position the company here. I think where we're positioned now, I think, strategically, we're in a better position than we've been in for years.

Got it. You mentioned medium-term targets. And certainly, the net interest margin, reaching the upper 3% range is probably the most impactful variable to kind of get into your return targets. You actually had NIM up 20 basis points last quarter -- sorry, up 10 basis points last quarter despite a 20 basis point adverse impact from selling the card portfolio. I know there was kind of some other puts and takes in the second quarter. So just maybe just talk to in terms of how you see the margin trending in the back half of this year. I'm told that that's going to cut next week. And just how does that impact near-term longer-term results?

Yes. Look, I think the second quarter demonstrated solid progress towards our high 3 sustainable NIM target. And a lot of the factors that drove that, the asset repricing, the optimization of our portfolio, the discipline that we've been showing in pricing, both our deposits and our retail auto loans, all those things remain intact. It's not going to be a straight line, of course, and we'll see those factors kind of play in differently in different quarters. But it's allowed us to kind of guide people towards the higher end of our full year NIM range. And so we feel pretty good about the progress that we've demonstrated. And again, it reflects not only discipline on our part, but also some real tailwinds in our business that we think have some legs to them and give us a lot of confidence, not just meeting our high 3% NIM guide -- NIM target, but actually doing it on a sustainable basis. We are setting the business up to be able to sustain attractive higher margins for the foreseeable future.

Got it. Maybe we have the next ARS question. But I guess maybe on that front, you talked earlier in the -- about the strong auto -- retail auto performance in the first half of the year, could you maybe talk to, I guess, in the past, you've talked about kind of keeping the balance sheet stable, I mean, potentially down given what's going on the in commercial side. Just talk to, maybe we should see balance sheet growth, particularly you talked in the past on the consumer finance side, you talked about strong auto production in the first half of the year. Maybe just talked about your thoughts on just balance sheet growth in general management.

Yes. Look, I mean, as I said earlier, we've positioned Ally for growth going forward. And we've deliberately focused on large, fragmented markets that present to us a lot of opportunity. But we're disciplined. We're growing in the places where we want to grow. And so you'll see our balance sheet emphasizing our retail auto loan product and our corporate finance product. Those are the products they generate higher margins and there are businesses that we've been in for a long time. And we -- and again, we've got that relevant scale. We've got deep relationships, and we've got every reason to win. And so we are absolutely growing our balance sheet in the places that we want to grow. Now that being said, this year, we've guided to average earning assets down 2% for the year. And that's driven by the exit of the card business, putting our mortgage business in runoff. A number of the things where we're deemphasizing the businesses and the product areas that are lower margin for us and lower return. And quite frankly, from an interest rate perspective, don't meet our balance sheet -- or don't meet our balance sheet needs. But I think it's important to point out that when you look at -- sorry, when you look at end-of-period assets, our expectation is for end-of-period assets to be nearly flat. And that's driven by growth in the places where we really want to grow in retail auto loans and corporate finance. As you pointed out, first half of the year has been excellent on the dealer financial services front. Our application volume in the first 2 quarters were both records. We sit here with strong application volume in the third quarter. And so we're on track for a record year in terms of application volume, and we've translated that into really strong originations activity. Now, we're not just growing for the sake of growing. We're very disciplined and our application volume affords us a position where we can be selective about managing towards risk and return. And that's exactly what we've done. We've applied the same discipline to our corporate finance business as well. So we're growing those, but we're growing them in a responsible and disciplined way with an eye towards both risk as well as return.

I guess maybe looking further out into next year, I guess maybe just kind of more near term, you talked about margin being the upper half of that 3.45% to 3.50% range or 3.40% for the full year, 3.45% last quarter. So it sounds like we should expect kind of continued expansion in the back half of the year.

Yes. So we've guided towards the high end of our range. So our range was 3.40% to 3.50%. So we're guiding towards the upper half of that range. And that implies continued improvement in NIM. Now, it's not a straight line. And as we've discussed many times before, the pace, the timing, the frequency of Fed actions will impact the quarter-to-quarter dynamic in terms of that NIM progression, but the medium-term target is unchanged. It doesn't affect our drive and our confidence in getting to a high 3s sustainable NIM over time.

And then just on your comments on balance sheet growth, you have kind of a headwind this year from the card sale, obviously, commercial floor plan. As you think about balance sheet growth beyond this year, can you begin to restart to grow earning assets?

Yes, absolutely. I think it's our expectation that we'll grow earning assets beyond this year going forward, call it, a low single-digit percentage. And within that, if you just were to focus on retail auto and corporate finance, those assets, we expect to grow at more of a mid-single-digit percentage. And so yes, absolutely, the growth is there, and we expect to see that growth expressed as you move forward into 2026 and beyond.

You mentioned kind of record application volume in auto. There's been several competitors starting to lean back into the space. I just came from Wells Fargo, and they talked about their new relationship with Audi. Just -- maybe just talk to how you view the car competitive landscape and kind of just what's your outlook for the volume and pricing?

Yes. Look, the -- yes, the first half of the year, we saw competitors come back. I think it's other folks recognizing the attractiveness of the asset class. That being said, we're still a preferred partner for a lot of our dealers and for our OEMs. I mean I think they value our all-in value proposition. We're there for them through the cycle. We speak for a large portion of the credit spectrum. And we provide them with an all-in value proposition that combines access to our SmartAuction platform, floor plan financing, insurance products, both for the floor plan as well as in the F&I office. We provide a lot of value to our dealers, and it puts us in a preferred position as a partner. And that's why we've been -- even amidst more competition from some of the folks you mentioned, we're still in this position where we're driving record application volumes, and we're showing significant origination volume growth.

Got it. Maybe shifting gears to deposits. I guess you've seen kind of deposit pricing come down early in the year. You talked about a target beta around 70%, which is, I think, where you are currently. The Fed is on the verge of easing, we think. Maybe just talk to how you think about that 70% beta and maybe more broadly, how you think about growth and customer acquisition as just this rate cycle evolves?

Yes. We've built a really resilient deposit franchise. It's a real asset for Ally, and it's really different from other deposit franchises that are out there. And that's something that we particularly value about our franchise. Our customers choose us because of trust, because of a top-notch digital experience, because of the all-in value proposition and the product offering. It's not just about price. Offering a compelling price is important. It's something that's a valuable part of our proposition, but that's not all that it's about. And so we think we have a fantastic deposit franchise. I think the consistency in terms of customer growth and the strong retention that we have are evidence of the strength of the franchise as well as the fact that when you kind of look at the recent history of price changes in terms of deposit pricing, we've tended to be a leader and the market has tended to follow us. I think all of that speaks to the overall strength of our deposit franchise. You mentioned betas, I think the last year actually provides a pretty good case study in that respect. And so you rewind a year ago, you saw the Fed take action pretty quickly with multiple rate cuts at the end of last year. And our deposit betas performed exactly the way that we expected them to in that price actions were slow in the beginning. But ultimately, our price actions caught up, our betas caught up and ended up exactly where we thought they'd be by the time you got to the first half of last year. And so I'd say that's a great case study in terms of kind of how you think things ought to progress going forward. Again, the pace of Fed cuts, the magnitude of Fed cuts, the actual timing of Fed cuts, they'll introduce variability in terms of how all that plays out and, of course, the overall competitive environment. But I think what we went through last year provides a pretty good case study and a pretty good road map for what to expect going forward.

And then before we move off of NII, we asked the audience when they expect Ally to get to the upper 3% NIM area. The consensus room was second half of next year. I'm not sure what your model has?

We have been very deliberate about not promising a specific NIM in a specific quarter. And it speaks to that quarter-over-quarter dynamic that I mentioned earlier, right? The pace, the timing, the magnitude of Fed actions are going to impact our NIM progression as you go quarter-to-quarter. But it doesn't change fundamentally the overall destination. And it doesn't significantly change the overall timing. It just affects that quarter-to-quarter progression. But I can't argue with that.

Maybe we shift gears to credit quality, which was a big focus at this event last year. It feels like the momentum has shifted because you look at the second quarter, charge-offs were down on a year-over-year basis for the second straight quarter. delinquencies down on a year-over-year basis for the first time in, I think, like 5 years. On the earnings call, you kind of brought down the upper end of the charge-off range. I felt like it could have come down maybe a little bit further just based on the other trends we're seeing. Maybe just talk to kind of what's driving the current performance and just how you kind of see the loss cycle playing out?

Yes. Look, our message on losses has been pretty consistent all year, right? And we like to think about it in terms of a framework where we kind of think about 3 things: delinquencies what goes to loss or flow to loss during a particular period and then severity heavily influenced by used car prices. And those -- across all 3 of those factors, things have been pretty constructive. This year so far and at the tail end of last year as well. And so if you think, for example, just in terms of delinquency, as you pointed out, delinquency was down. Delinquency continues to trend really nicely, and we're kind of very pleased with where that's going. In terms of flow to loss, we continue to have a constructive flow to loss trend that's continued throughout the year. In terms of used car prices, used car prices continue to be constructive, supporting us from a severity perspective. And so I'd say the message is very consistent to what we've said before. Continuation of the trends that we've been seeing would take us towards the low end of that loss range. And that, I should also say is also supported by the fact that we've got a front book that continues to outperform our expectations at the time when we priced it. And so again, kind of very similar message to what we've talked about before. Of course, there's a lot of noise in the macro. I don't think our borrowers have noticed. Our borrowers continue to be very resilient. Consumer credit has been resilient, but there is a lot of noise in the macro. And so to the extent that we saw a pickup in unemployment, to the extent that we saw the used car prices change in a significant way, that could obviously change the course. But right now and for the last -- so far this year, actually, it's felt pretty constructive.

We just put up the next ARS question. I ask a follow-up. But, I guess, Russ, just to be clear, so you originally saying 2% and 2.25% for your charge-off guidance. On earnings, you said 2% to 2.15% for charge-offs. Now you're saying the low end of 2% to 2.15%.

No, I'm saying the exact same thing we said at the end of second quarter. And quite frankly, it's the same thing we said after first quarter as well, which is if we see a continuation of the trends that we've been seeing so far this year, that takes us to the low end of our guidance range. But we're not changing our range. It's 2% to 2.15%, and we're just pointing to the circumstances that would take us to the low end of that range versus some of the risks like unemployment, the macro, et cetera, that could take us to a different part of the range.

So range is still 2% to 2.15%, but you're feeling good.

That's right.

Fair enough. And I guess maybe just -- could you just maybe just talk about underwriting in general? I guess you're feeling good about credit quality, certainly a lot better today than we did a year ago. It's obviously a dynamic macro environment. You just kind of laid out several of the puts and takes. But as you look ahead, how do you see the opportunities to kind of optimize risk given the curtailments you put in place in 2022 and 2023? I think S-tier originations were over 40% for the last several quarters. Maybe, just kind of now we're feeling better. How do you just think about that dynamic?

Yes. Look, our underwriting, it's a dynamic process, and we look at it very much on a real-time basis. And so -- and we look at it at a very granular basis. And we look in particular at how our front book is performing relative to our expectations. We spend a lot of time kind of analyzing what we call micro-segments. And so for example, coming out of the post-pandemic period, we saw interesting trends in folks that have high payment sizes. And so a lot of the micro-segments that involved kind of high payment sizes have been curtailed. And some of that curtailment is through pricing actions where we've kind of priced ourselves to be less competitive. In some cases, we'll cut segments off entirely and we won't approve them at any price. And so we've taken -- we took a number of those actions that we think significantly improved our underwriting and contributed to some of the favorability that we're seeing in our front book. As we look at our performance now, we've also learned from micro-segments that outperformed our expectations even through the post-pandemic period. And so one example of that would be aged vehicles, which have traditionally underperformed, but we look at it on a micro-segment basis. We have an aged vehicle, a low monthly payment, strong borrower credit. We found segments like that, that actually have tended to outperform. And so where we are is in that kind of constant kind of tweaking of our underwriting, we continue to look for segments like that to experiment with those segments, starting with manual approvals and then ultimately moving them to auto approvals. And that's a continuous process. That's something that we do as a matter of course, and we expect we're going to continue to keep doing that. And again, the favorability that we've seen in front book. Front book performance certainly supports that approach. You're not going to see a quarter where we go from underwriting 40-plus percent S-tier to sub-30% S-tier in one bank. We're not going to flip a switch. It's going to be organic. It's going to be dynamic, and it's going to be a constant tweaking of our underwriting to make our underwriting better in a very granular and analytical way.

Got it. And then we asked the audience about your 2026 charge-off guide. 1.8% to 2% is by far the most used answer.

That's interesting. And we'll give a 2026 retail NCO guide in January?

It's a poker face. I guess, on capital, we talked earlier about several steps you've taken to optimize capital. Just how should investors think about kind of your capital management framework going forward? When might share repurchase realistically come back into the conversation? And is there any guidelines or levels that we can see from an external perspective that we should view as kind of indicating your level of comfort to resume capital distribution?

Yes. Look, when we think about capital, we're really balancing the need to support growth in our businesses, in the businesses that we want to grow against our desire to build capital and have a solid balance sheet. As you know, there's been some movement on the regulatory side. There was a Basel III proposal a few years ago that would have AOCI count towards capital, which would impact our capital position negatively. Our expectation is the regulators continue to work on Basel III. So there's still some real uncertainty in terms of where the capital regulations end up, but until we get told otherwise, we've been managing assuming that AOCI will eventually feed into capital and affect us negatively. And so we've been in capital build mode as a result of that. And we've taken a number of steps, including the issuance of CRTs, including the discipline that we apply to our portfolio of businesses and the exit of our noncore businesses. We're pleased with our ability to build capital through those means. I'd also say now we're positioning -- we're transitioning to a point where our organic capital generation from earnings is getting a lot stronger. And so we feel good about that. And so there's a lot of positive things going on with capital, both in terms of kind of where we are as well as our trajectory given our earnings profile and then the optionality that we've developed through things like these credit risk transfer transactions. So we're increasingly feeling better about our capital position. That being said, the timing around share repurchases, look, it's important to us. Our business is one that should generate excess capital and where we should be buying back stock, and it's certainly our expectation to return to that in a timely fashion. But as far as the timing of that goes, we're not going to offer you kind of real clarity to that -- real clarity to that right now, but I can tell you, it's important to us. And it's at a capital level that's probably a little higher than where we are today, maybe not all the way to our 9% management target on a fully phased-in basis, but certainly higher than where we are today. But where we have visibility around enough organic earnings generation that we feel really good about the trajectory. And then, of course, to the extent that there are changes in regulations that could impact us as well in terms of how we think about that capital projection -- that capital progression.

I have a few follow-ups, but if we could put up the next ARS question. I guess, you mentioned AOCI. And even if it kind of comes into capital or the AOCI opt out goes away, I guess, is the way to say it, it will likely be on a very phased-in basis. And I think to date, every one of those securities mature to par, and that will just kind of burn off over time anyway. How much of the, I guess, a headwind does that worry you? Is it just more just optically that you just want to be mindful of where that stands?

Look, I don't see it as a real headwind. I think you're right on -- if it does come into capital, there'll be a transition period. There'll probably be other puts and takes in the regs that will impact us. I think as prudent stewards of capital and of the organization, of course, we plan for what we probably think is the worst, which is the Basel III proposal from whatever, 2.5 years ago. But even with that proposal, I mean, we feel pretty good about our capital trajectory. I mean we've done a lot of things to demonstrate our ability to generate capital through the balance sheet. And we're now at the point where our earnings are starting to generate meaningful amounts of capital as well. So even in that, what we would consider to probably be a worst-case scenario, we feel pretty good about our capital trajectory. And again, I do expect we'll get back to repurchasing shares. And I think we'll be kind of more than well positioned to meet the requirements of any phase-in period.

You got the room kind of split between first half and second half of next year.

Yes. I mean we're not going to give you a specific time line, but it doesn't look unreasonable.

And just one more follow-up before we get up to capital is you mentioned the CRT transactions, the credit risk transfers. Just maybe walk us through the rationale behind that move. I know they're capital efficient, but you're giving up, I guess, earnings at some point. Just kind of how you're thinking about those transactions, the ones you've done and maybe prospectively going forward?

Yes. They're highly capital efficient. And the last one we did, we did -- we took a $5 billion pool of retail auto loans. We basically kind of put them into a CRT structure and effectively bought insurance against credit losses on those loans in the capital markets by issuing a roughly $550 million note, super capital efficient. I mean the effective cost of capital for that when you look at the capital benefit from reducing the risk weights as a result of having that insurance in place, the effective cost of capital is very low, much lower than our overall cost of capital. And so we see it as a very efficient way of managing the balance sheet and supporting our capital levels and positioning us ultimately to continue to support our dealers and to speak for a large portion of originations in the market. What's interesting about it is the capital benefit is tied to the actual assets. And the assets are by nature, relatively short duration, right? They're auto loans. And in the case of the assets that we put into these pools, it's seasoned collateral. So it's already aged out about 6 months on average. And so when you look at the remaining duration, it's probably sub 2 years. So it's relatively short-dated capital. And so we're mindful of the fact that the capital benefit from these CRTs runs off with the assets over a relatively short duration. And of course, we continue to originate, and it's important to us that we're able to continue to originate and continue to support our dealers. And so we're careful about not putting ourselves on a treadmill at a speed that we can't keep up with, that is we're mindful of the fact that, that RWA comes back. So we've been disciplined. We've been opportunistic, and we've been thoughtful about the volume and the timing of when we issue CRTs, not to put ourselves in a position where we're dependent on what is ultimately a capital markets transaction. We've done $12 billion of CRTs so far. We probably have about $9.5 billion on the books. And so we've done a significant amount of volume. But again, we're very conscious of just the duration of that capital and the treadmill, so to speak, that it creates and making sure, again, that we're not creating a dependency. But look, we're going to do more CRT. We see it as a very useful tool in our box and just helpful to managing the balance sheet and optimizing our overall return profile.

Got it. And maybe just on expenses, you've talked to kind of flat expenses for the year. I guess, first off, is that still the case? And then just how are you balancing investments across the core franchises, where you see opportunities for growth versus kind of cost management?

Yes. No, it's right as you think about the full year. I would say when you look at individual quarters, there'll be a little bit of noise in the third quarter just given year-over-year comps. But overall, right. Managing expenses is important to us. That's been a big focus for us over the last couple of years. And as you know, Ally went through a period where the institution was investing in a lot of good places in terms of building the infrastructure we have today, but we've taken a really disciplined approach. We've arrested that expense growth, and we've positioned the company for positive operating leverage going forward, and we're going to continue to do that. As you think about expense growth going forward, think about it in terms of kind of flat to low single-digit percentage growth on a year-over-year basis coming out of this year.

Okay. And I guess the last guidance point we haven't talked about is on the fee side. But I think you've talked to flat other revenue year-over-year for -- flat fee income for 2025 despite the fact that we've lost credit card and mortgage. Based on our math, if we kind of adjust for that, it seems like it's mid-single-digit growth. I don't know if you could help me out with that, but how should we think about the run rate for that? Is mid-single-digit growth, how we should think about for next year? You talked -- you gave us some expense color for next year or how to think about that going forward. So maybe you do the same thing on the fee side.

Yes. No, your math is right. Mid-single digits going forward is the right way to think about that. And when you kind of get underneath that, right, a lot of our fee revenue comes from the insurance business. Again, we're continuing to see strong engagement from our dealer population. We're really leveraging the benefit of being in the dealership. And so being in the dealership on the auto finance side awards our insurance colleagues the -- really an inside track in terms of securing insurance business, both on floorplan as well as in the F&I office. And so we're going to continue to leverage that and continue to grow that business. We've also got great traction with our SmartAuction product and with our pass-through program. So we've got a number of sources of other income on the auto side of the house. And then an important source of other income for us has been in the corporate finance business. That's a business where we are, in almost all cases, leading the transactions that we underwrite. We're a credit shop. We're doing the hard underwriting and the structuring. And that puts us in a position where we can offer other banks the opportunity to participate effectively in syndications of our loans. That creates fee income for us. And it's actually historically been a pretty good. It's a lumpy source of fee income, but it's been a pretty good source of fee income. And again, we're leaning into growth in that business. And so our expectation is we'll continue to see more opportunities there. So aside from exiting card and mortgage, we've got a number of engines of growth there. And I think your math in terms of mid-single digits is exactly right.

Got it. And maybe we'll flip the next ARS question. I guess, Russ, as we come towards the end of the time. Just, I guess, maybe just ask more broadly, is there anything you'd like to share on how the quarter is shaping up that we haven't talked about or just maybe you think about the rest of the year?

Yes, sure. Maybe I'll just start with -- we give full year guidance. I'll start with full year guidance. No change to full year guidance. If I kind of think about kind of what are the key messages today, what do I want you to take away from it? I'd say, look, we've taken a number of important actions to make Ally simpler, more focused and to take risk off the table. That being said, we're positioned for growth in our core businesses where we have a long runway for growth and the fact that there are large fragmented markets and where we're positioned with leading franchises. And I'd say, as you look at second quarter and you look at our results over the coming quarters, I think we've demonstrated strong progress towards our medium-term targets, and it's our expectation that we're going to continue to do that.

Got it. We have maybe 4 more minutes remaining. I'm not sure there's questions from the audience. I guess, Russ, as the audience thinks of stuff, maybe just kind of -- we asked the audience what would cause them to be more constructive on the shares of Ally. Increasing ROE is certainly one, followed by improvement in credit would be 2. But I feel like a lot of the stuff we talked about today drives that ROTCE higher.

Yes. Look, I think number 2 drives number 4, and we're working on all those things.

And is mid-teens kind of ROTCE still the right place to think about Ally?

Yes, absolutely. And when we look at kind of how we think about the business, the actions we've taken to focus on our core and the discipline that we're exercising within the core in terms of pricing on both the asset side as well as the liability side, we're setting ourselves up for durable, sustainable, higher margins that support that mid-teens return target. So it's sustainable, it's long term. It's how we're positioning and running the business.

Any other questions? I guess, Russ, a good person asked. Maybe, I guess, we hear a lot about the tariffs impacting the audio industry relatively more than other segments and kind of evolving. But just maybe just talk to how you kind of see that playing out. Obviously, you're in constant contact with all these dealers. How are they kind of just managing this dynamic environment?

Yes. I mean the dealers are a very resilient bunch. They're entrepreneurial by nature. And yes, they've got a great history of working through a number of changes in the market and the environment in automotive technology, and they're handling this in stride. And as we look at the year-to-date, the application flow, the origination volume flow, the strength in used car sales, all those are evidence of dealers managing through this in a constructive way. I think people are starting to get used to the idea that the tariffs are there, and they're still moving around in terms of quantum and size and everything else. And as we look at the year, there's a good chance we saw some pull forward in a number of areas as a result of tariffs, also as a result of changes in the EV lease tax credits. And so we'll continue to see some noise in terms of just kind of overall level of vehicle sales volumes. We'll probably see some continued movement in terms of how people think about pricing as well as discounts. But overall, I think the industry is handling it. And I've been pleased by the resilience we're seeing among our dealers and the resilience we're seeing among our customers, too, and our borrowers.

Great. On that note, please join me in thanking Russ for his time today.

Thank you.