ALLY

Good day, and thank you for standing by. Welcome to the First Quarter 2026 Ally Financial Inc. Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. You will then hear an automated message advising your hand is raised. To withdraw your question, please press 11 again. Be advised that today's conference is being recorded. I would now like to hand the conference over to Sean Leary, Chief Financial Planning and Investor Relations Officer. Please go ahead.

Thank you, Liz. Good morning, and welcome to Ally Financial Inc.'s First Quarter 2026 Earnings Call. This morning, our CEO, Michael Rhodes, and our CFO, Russ Hutchinson, will review Ally Financial Inc.'s results before taking questions. The presentation we will reference can be found on the Investor Relations section of our website, ally.com. Forward-looking statements and risk factor language governing today's call are on Page two. GAAP and non-GAAP measures pertaining to our operating performance and capital results are on Page three. As a reminder, non-GAAP or core metrics are supplemental to and not a substitute for U.S. GAAP measures. Definitions and reconciliations can be found in the appendix. And with that, I will turn the call over to Michael.

Thank you, Sean, and good morning, everyone. I appreciate you joining us today for our first quarter earnings call. In the last update, I noted my optimism for the path ahead. One quarter into 2026, our results confirm we are on the right path and support my confidence in our outlook, even as the macro environment remains dynamic. That confidence is grounded in the position of strength we carried into the year, driven by the actions to focus our business, streamline our operations, and increase our capital levels. The Focus Forward strategy we rolled out last year is simple and powerful. “Focus” means we are doubling down on the businesses and segments where we have clear competitive advantages. These are areas where we have long-standing relationships, differentiated capabilities, relevant scale, and a right to win. “Forward” reflects our ambition to create something extraordinary and sustainable from a position of strength. Together, these principles have allowed us to streamline and sharpen our focus, building a business that is increasingly impactful and enduring. The results since our refresh last year provide unmistakable evidence it is working. Record application flow has enabled strong origination volume with accretive risk-adjusted returns. Record written premium volume shows we continue to leverage our insurance offering to deepen dealer relationships and help them win across their entire ecosystem. We delivered strong growth across the corporate finance portfolio while delivering an ROE of over 25% and maintaining an unwavering focus on credit risk. And we reinforced our position as the nation's leading all-digital direct bank; we continue to grow customers and increase engagement, providing stable, cost-efficient funding. The progress is real; we remain committed to delivering even more. With that, let me cover some of the highlights from our first quarter. Adjusted EPS of $1.11 was up 90% year over year. Core ROTCE of 11.1% was up 440 basis points versus 2025, reflecting the structurally high returns we are capable of generating. Margin of 3.52% was impacted by the lease headwinds we discussed last quarter, but we remain confident in our ability to deliver a sustainable upper-3% margin, the final lever of our mid-teens thesis. Adjusted net revenue of $2.2 billion was up 6% year over year and 12% when adjusting for the sale of credit card. Finally, CET1 of 10.1% was up roughly 60 basis points year over year. We are encouraged by the thoughtful Basel III proposal released a few weeks ago and the clarity it provides. We appreciate the agencies' efforts to modernize the capital rules and achieve a more streamlined framework that better aligns capital requirements with the risks inherent in our business. Specific to Ally Financial Inc., I view the proposal as being constructive and supporting our existing capital allocation priorities. We remain confident in our ability to identify accretive opportunities for organic growth in our business, build CET1, and return capital to shareholders. The strategy is amplified by our brand and our culture. Our brand is an asset, one known for authenticity and impact. Earlier this week, we announced that we met our 50/50 media pledge to spend equally in men's and women's sports. That is a year ahead of schedule and clear proof of the impact we can make. Women's sports have been experiencing remarkable growth in recent years, and we are incredibly proud to partner with and support those shaping the evolution. The business outcomes of these investments have been encouraging, with our brand health at an all-time high and customer retention continuing to lead the industry. Our culture is based on an unwavering commitment to “Do It Right” and establishes an ethos for everything we do. In the first quarter, we were honored to be named to Fortune's 100 Best Companies to Work For—the highest ranking we have received, and the fourth consecutive year being recognized. Additionally, Newsweek included Ally Financial Inc. on their list of the Most Trusted Companies. These recognitions reflect the kind of culture and customer centricity our team builds every day. What mattered even more was hearing directly from our teammates. Over 90% said that Ally Financial Inc. is a great place to work and saw meaningful gains in trust in leadership and confidence in where we are headed. That tells me our strategy is resonating. We are aligned, focused, and executing in a way that employees can resonate with. That alignment is energizing. The momentum is real, and I am excited for what lies ahead. With that, let us turn to Page five and discuss the core franchises. Operational momentum within each of our core franchises remains strong, builds on the progress we delivered in 2025, and positions us for further improvement in financial performance. Our dealer-centric, through-the-cycle approach remains a key differentiator, driving results across Dealer Financial Services and reinforcing the strength of our relationships. 4.4 million applications reflect another record quarter. The scale and breadth of our product offerings and mutually beneficial dealer relationships remain key strategic advantages that drive strong application flow and enable us to be selective in what we originate. The strength at the top of the funnel translates into solid origination performance, with consumer originations of $11.5 billion, up 13% year over year despite a decline in industry light vehicle sales and healthy competition. Importantly, with a focus on risk-adjusted returns, we are mindful of the economic environment and maintain a dynamic approach to underwriting. The benefit of the strong application flow extends beyond originations, as we saw record volume and revenue from our pass-through programs this quarter. Insurance is a critical lever, contributing to the success of our dealer partners and our ability to win. That strength is translating to results, with written premium of $389 million marking a first-quarter record for Ally Financial Inc. Growth continues to be fueled by leveraging synergies with the auto finance team as we highlight our all-in value proposition to support dealers across all aspects of their business. In Corporate Finance, we delivered a 26% ROE while growing the portfolio to $13.7 billion, up roughly 6% quarter over quarter. While we continue to see accretive growth opportunities, credit remains central to how we operate. As we have cited previously, we serve as the lead agent for virtually all transactions, giving us the ability to own the diligence process and underwrite and structure transactions appropriately. Turning to Ally Bank, our customer-first approach sets us apart; we continue to benefit from the shift to digital channels. We ended the quarter with $146 billion in retail deposit balances, reinforcing our position as the largest all-digital direct bank in the U.S. Our focus remains on providing best-in-class products and services to drive customer growth and retention. We saw an improvement in customer acquisition in the first quarter, and over the past year we delivered 6% customer growth. We see meaningful opportunity to continue deepening relationships across 3.5 million customers as we look to provide value extending beyond rate paid. The strength and stability of the portfolio remains critical to our success. Retail deposits continue to represent nearly 90% of total funding and 92% are FDIC insured. The franchise provides a stable, low-cost funding source and enables our business to focus on prudent growth. Let me finish where I opened up, and that is with optimism. Our path ahead is clear and compelling. Our core franchises are delivering, and returns are moving higher. I am encouraged by the progress and momentum, and while mindful of the dynamic operating environment, I am optimistic for what remains ahead. And with that, I will turn it over to Russ to walk through the financials in more detail. Thank you.

I will begin by walking through first quarter performance on Slide six. Net financing revenue, excluding OID, of $1.6 billion was up 8% year over year and up 15% when excluding credit card in the prior year. We continue to benefit from strong performance across our core franchises, ongoing optimization of the balance sheet toward higher-yielding assets, and our disciplined approach to deposit pricing. Adjusted other revenue of $572 million in the first quarter was flat year over year despite an approximately $25 million headwind due to the sale of credit card. This momentum reflects the strength of our diversified revenue streams, which include Insurance, SmartAuction, and our pass-through programs. Adjusted provision expense of $474 million was down $23 million year over year, largely driven by continued improvement in retail auto NCOs and the exit from credit card. Retail auto NCOs declined 15 basis points year over year to 1.97%. Adjusted noninterest expense of $1.2 billion was down $85 million year over year, demonstrating our continued commitment to cost discipline, as well as reflecting the sale of credit card and historically elevated weather losses in March last year. Let us move to Slide seven to discuss margin in detail. Net interest margin, excluding OID, was 3.52%, as repricing of floating-rate exposures and lower lease yields were offset by lower deposit costs. Retail auto portfolio yield, excluding the impact from hedges, was flat sequentially, consistent with the expectations noted in January. Lease yield included a $10 million loss on lease terminations, given the headwinds on select plug-in hybrids we noted in January. We assess depreciation rates quarterly, and we accelerated depreciation on certain leases maturing in the near term, primarily due to these impacted models. As a reminder, we expect our lease termination mix will start to shift next year. Approximately half of the leases we originated over the past two years have OEM residual value guarantees, while the other half reflect a more diversified mix of OEMs. This will continue to reduce lease gain and loss volatility over time. On the liability side, cost of funds decreased 9 basis points quarter over quarter, largely driven by a 9 basis point decrease in deposit costs. Retail deposit balances increased $2.6 billion, and we added 74,000 net new customers, clear proof our brand and products resonate in the market. We remain disciplined on pricing through a key growth period, but given the strength of the portfolio, we were able to reduce liquid savings rates by 10 basis points in February, bringing our cumulative beta to 57%. While not reflected in first-quarter results, we just reduced liquid savings another 10 basis points, bringing our cumulative beta to 63%. Additionally, CD maturities remain a tailwind, with approximately $18 billion in maturities in 2026 carrying a weighted average yield of nearly 4%. Looking ahead, we anticipate a decline in second-quarter retail deposit balances given seasonal tax payments. Our focus remains on customer growth trends and optimizing overall cost of funds. Average earning assets were up 2% year over year. Importantly, growth continues to be concentrated in our highest-returning assets, Retail Auto and Corporate Finance. Those portfolios in aggregate were up 6% year over year. Momentum across the balance sheet supports my conviction in our path to a sustainable upper-3% margin over time across a variety of rate environments. Turning to Page eight. CET1 of 10.1% was up approximately 60 basis points versus the prior year. Like Michael, I am appreciative of our regulators' thoughtful approach to the revised proposals. Under the revised standardized approach, we would produce a CET1 just above 9% when fully phasing in AOCI. That is nearly 100 basis points higher than where we would have landed under the 2023 proposal. In addition to the standardized approach, we continue to evaluate the expanded risk-based framework. As Michael noted, the proposals indicate a favorable outcome for Ally Financial Inc., and our capital allocation priorities remain the same. We look forward to continuing to drive accretive growth in our core franchises, build capital, support our dividend, and repurchase shares. Earlier this week, we announced a quarterly dividend of $0.30 for 2026, which remains consistent with the prior quarter, and we repurchased shares worth $147 million. Our open-ended buyback authorization continues to provide flexibility, enabling us to remain dynamic in any given quarter, as buybacks complement the rest of our capital allocation framework. At the end of the quarter, adjusted tangible book value per share reached an all-time high of $41, up nearly 14% over the past year and reflecting our ability to concurrently increase book value and returns. On Slide nine, we will review asset quality trends. Consolidated net charge-offs of 121 basis points were down 13 basis points versus the prior quarter and down 29 basis points year over year. Strength across our commercial portfolios continues to complement favorable trends in Retail Auto. Retail auto net charge-offs of 197 basis points were down 17 basis points quarter over quarter and down 15 basis points compared to a year ago. The first quarter marked the fifth consecutive quarter of year-over-year improvement in NCOs, as we benefited from particularly strong used vehicle prices and record-low flow-to-loss rates. On the top right of the page, 30-plus all-in delinquencies of 4.6% were down 17 basis points from the prior year, marking the fourth consecutive quarter of year-over-year improvement on an all-in basis. Industry data has shown that tax refunds increased roughly 11% year over year versus some earlier expectations for increases above 20%. Notwithstanding the increase in tax refunds and a dynamic macro, delinquency followed what we would consider to be a typical seasonal pattern during the quarter. We have continued to see a resilient consumer, but given the evolving backdrop, we feel it is appropriate to remain measured. Turning to the bottom of the page on reserves, consolidated coverage decreased 1 basis point this quarter to 2.53% given mix dynamics, while the retail auto coverage rate was flat at 3.75%. Retail auto coverage levels continue to balance favorable credit results within our portfolio against macroeconomic uncertainty. Across our commercial portfolios, credit performance remains strong with stable fundamentals. We continue to see accretive growth opportunities, but risk-adjusted returns remain our focus. We will remain disciplined on both underwriting and pricing, as growth is assessed through a credit-first lens. Moving to Slide 10 to review Auto segment highlights. Pretax income of $336 million was lower year over year due mainly to CECL reserve build. On the bottom left, we have highlighted the trajectory of retail auto portfolio yields. Excluding the impact from hedges, yields were flat quarter over quarter and up 16 basis points year over year. First-quarter originated yield of 9.6% was relatively flat quarter over quarter despite ongoing competition, coming in slightly favorable versus our original expectations. S-tier concentration declined to 41% in the period. We will remain dynamic as we optimize risk-adjusted returns across the credit spectrum. On the bottom right of the page, $11.5 billion of consumer originations were enabled by an all-time record in consumer applications. Our strategic focus is on the top of the funnel and our all-in dealer-centric model. Originations were up 13% year over year despite a continuation of strong competition and a decline in new and used industry sales. We remain disciplined in our approach to underwriting as we assess the potential impact of higher oil prices and lower consumer sentiment. Our ability to actively calibrate our buy box with the evolving market will support accretive, risk-adjusted returns over time. Turning to Insurance on Slide 11. Core pretax income was $87 million, up $70 million year over year. Total written premiums of $389 million were up $4 million year over year. Insurance losses of $121 million were down $40 million, primarily due to lower weather losses given historic weather events in the prior year. Insurance continues to drive capital-efficient, diversified revenue and remains a key component of our long-term growth strategy. We continue to leverage synergies with Auto Finance to drive momentum within the business and deepen our all-in value proposition as we help our dealer partners succeed in all aspects of their business. Turning to Corporate Finance on Slide 12. The business delivered another strong quarter with core pretax income of $94 million and a 26% ROE. We have continued to prudently grow the portfolio, which stands at nearly $14 billion today. Credit discipline is embedded in everything we do. It guides our growth and is reflected in the credit characteristics of the portfolio. Our strategy is built on long-standing relationships and deep underwriting familiarity, which we believe are advantages in managing risk. Additionally, our differentiated funding profile enables us to structure transactions conservatively while generating accretive returns. Given headlines related to the private credit industry more broadly, we have added some metrics highlighting the strength of our portfolio. We have never recorded a loss since we entered the business in 2019, and no loan has ever been classified as criticized or placed on nonaccrual. Our approach remains highly disciplined, anchored in conservative underwriting with loan-level detail, conservative advance rates, tight concentration limits and eligibility requirements, along with the ability to revalue underlying collateral and reduce borrowing limits. The portfolio is well diversified, spanning nearly 1,200 obligors with an average advance rate of 60%, reinforcing our strong collateral position. Our exposure is intentionally concentrated with groups of high-quality, scaled asset managers with proven through-the-cycle performance. Our track record and ongoing prioritization of credit risk management give us confidence in our ability to drive accretive growth going forward. I will briefly discuss our outlook on Slide 13. Guidance remains consistent with what we shared three months ago. We are pleased with our execution during the quarter as we continue to capitalize on the momentum across our core franchises. While we are closely monitoring the impacts of macroeconomic uncertainty, we remain confident in our ability to deliver against our full-year guidance. As noted on the page, our baseline assumptions reflect the March 31 forward curve, which does not include a fed funds cut until June 2027. Movement in benchmark rates may impact the timing and pace of future NIM expansion, but we remain confident in delivering a sustainable upper-3% margin over time across a range of rate environments. As Michael noted, we are encouraged by operational performance and improving financial results. Our Focus Forward strategy is working. Our team remains intensely focused on advancing our progress through disciplined execution. I remain confident in our ability to deliver compelling, long-term value for our shareholders. And with that, I will turn it over to Sean for Q&A.

Thank you, Russ. As we head into Q&A, we do ask that you limit yourself to one question and one follow-up. Liz, please begin the Q&A.

To ask a question at this time, please press 11 on your touchtone phone. Our first question comes from Ryan Nash with Goldman Sachs.

Hey, good morning, guys. Michael, maybe to kick it off, there is clearly a lot out there that the consumer is facing, whether it is volatile oil prices or other pieces of inflation. Interest rates are not as low as people had hoped. So when you think about all the things that are out there, can you maybe give us an update on what you are seeing on the consumer and what that means for your overall credit expectations going forward? Thank you. And when you look at it altogether, on the whole, it has yet to materially impact your business?

When you kind of look at it altogether, on the whole, it has yet to materially impact our business, and let me unpack that a bit more as I think about both today and looking ahead. Today, we see continued behavior as resilient, and I have mentioned this before in a couple of conversations—there is a bit of a disconnect between consumer sentiment data and what we are seeing in our portfolio. I will also offer that today we continue to see opportunities to generate loans with attractive risk-adjusted returns. We like the business that we are booking. At the same time, I think you heard in the comments we are choosing to be deliberately measured. If you look at the data from the quarter, auto applications are up 16% year over year, but origination volumes are at a slightly more moderate pace. We are prioritizing discipline over volume, and we are being measured, I think appropriately so. Looking ahead, our ability to predict exactly how conditions unfold is probably no better than anyone else’s, so we stay really focused on what we control. First, we remain anchored in our long-term strategy. I think the pivots that we took a year or so ago have really set us up well for this environment. Second, we run Ally Financial Inc. with a strong data discipline. We have lots of internal data—new origination data on the auto side, portfolio data and vintage trends, loss severity, roll rates, skip rates—and we look at external macro data, savings rates and income rates, even credit card delinquency and credit card minimum pay data. When you put it all together on a go-forward basis, we are being measured in this environment, but from the quarter we feel good about what we are delivering. There are headwinds and tailwinds, but we feel good about what we are seeing in our portfolio. Overall, I am aware the environment is unusual, but I am really pleased with our fundamentals and our recent performance.

Got it. Maybe as my follow-up, Russ, you reiterated the NIM of 3.60% to 3.70% despite the shift in rates and you are assuming no cuts now. Can you talk about how the cadence of the margin has changed, where you see the exit run rate now, and whether you can continue to manage deposit costs lower similar to the cut that you made yesterday in this sort of stable rate environment? Thank you.

Great, thanks, Ryan. There is a lot there; let me break that down. We have talked before about medium-term trends in our business—in terms of the portfolio mix, in terms of our deposit pricing beta. All those things remain very much intact and give us confidence around our medium-term trajectory in terms of net interest margin. The pace and magnitude of Fed funds changes can impact us in a given quarter, but those trends remain intact. As you pointed out, we have seen a shift in Fed funds expectations. Our outlook is now based on an assumption that Fed funds will be flat through the rest of this year, and we have maintained our guide at 3.60% to 3.70%. That is a reflection of the business performing as expected, with recent cuts to our OSA rates. We are operating at a 63% beta; that is very much in the range we have talked about and targeted. For the next couple of quarters, the second quarter will have the benefit of the recent cut we put through yesterday as well as the full-quarter impact of the cut we made back in February. CD maturities will continue throughout the year. In the background, there is ongoing portfolio mix migration as we run off lower-yielding mortgage securities and mortgage loans and continue to grow our higher-yielding Retail Auto and Corporate Finance books, leveraging momentum in both. Our overall outlook on NIM is unchanged. For the year, we expect 3.60% to 3.70%. As you do the math, that implies we exit the year at or above the high end of that range, and that continues to be our expectation. Movements in rates can affect us in a given quarter, but the business has ways of offsetting that.

Our next question comes from Robert Wildhack with Autonomous Research.

Good morning, guys. I will start on capital. The buyback came in better than we were modeling, and Michael, you and Russ called out some of the benefits to Ally Financial Inc. from the new proposal. If you add those things up, what kind of scope is there to maintain or even accelerate the current pace of buyback in the wake of the new rules? And then on the competitive environment, can you unpack what you are seeing on the retail auto side—there have been some newer or potential re-entrants there—and similarly on deposits? You highlighted the 63% cumulative beta so far. Have there been any changes to what you are seeing competitively on the deposit side too?

Thanks, Rob. Maybe I will start and Michael can jump in. First, I would reiterate the comments we made on the call. We are appreciative of these very thoughtful proposals. They are proposals, they will go through a comment period, and there may be some changes in the final rules. With that as context, our expectation is that they are constructive and favorable for Ally Financial Inc., as we pointed out. Our capital priorities remain unchanged. The first quarter provides a good template for how we prioritize growth in the businesses we are focused on—strong growth in Retail Auto and Corporate Finance—and ensuring we have capital to support that growth. We are also prioritizing continuing to build our capital and putting a buffer on top of the effective 9%-plus CET1 ratio that we would print if fully phased in under the RSA. And then, obviously, supporting our dividend and continuing to buy back stock. We think of this as a story of “and,” not “or.” We can do all of these things at the same time: support the growth of our core businesses, build our capital, support our dividend, and buy back shares.

On the competitive environment, starting on auto, there really have not been recent changes. We have had four straight quarters of elevated competition versus what we saw coming out of the pandemic, and we have continued to demonstrate momentum. Our dealers respond to the fact that we are a through-the-cycle partner. We support their businesses in a number of different ways and have long-standing, meaningful relationships. That has translated into record application volumes this quarter, which gives us an opportunity set to originate at volumes, credit, and yields we like. On deposits, we are very pleased with what we are seeing. We recognize there is competition for deposit balances, but we believe we are in relatively rarefied air as a digital bank with a national brand. There are not many who tick that box. We disclosed this quarter that our customer growth year over year was 6%, and in this environment we are actually seeing customer growth rates accelerating, not decelerating. Pricing aside, we like the margin we are getting in that business and the new volume flows. New flows are lower-balance customers, and we like that dynamic. The customer is clearly responding to a national brand, a top-notch digital experience, and competitive rates.

Our next question comes from Sanjay Sakhrani with KBW.

Thank you. Good morning. On credit, credit quality is doing pretty well. As we think about reserve coverage, how should we see the progression as charge-offs come down and delinquency follows? And, Michael, you mentioned you are being measured. Given the success you are having with credit, might you lean in a bit more on growth as we move forward if the geopolitical stuff subsides? Also, on application volume growth, very strong, and originated yield remains quite strong. What is driving the success here in the application volume—is it dealer penetration, or diversification across brands—and how does that translate into the defensibility of that yield, which is critical to the NIM progression?

As you pointed out, we are pleased with what we are seeing in the book. In the first quarter, flow-to-loss rates were solid. We got support from used vehicle prices. That translated into another quarter where NCOs and DQs are down on a year-over-year basis. Michael pointed out earlier the macro is dynamic, and we would consider ourselves to have a measured posture. On reserves, we held retail auto reserves flat at 3.75%. That takes into account what we are seeing in the book and the dynamic macro. We have a thorough process each quarter to set reserves. As we think about our return ambitions and mid-teens ROTCE, we do not predicate that on reserve releases; we look at the business on a steady-state basis.

You often hear us talk about being dynamic. In this environment, with what we see today, “measured” is the appropriate word. We are very data dependent, and as data ebbs and flows, we will make adjustments in the best interest of driving accretive business. On applications and yield, the strength in our application flows traces back to our strategic pivot a year ago—selling the credit card business, stopping mortgage originations, and focusing on our core businesses. We have been very intentional. Our dealer-facing teammates are building relationships every day. Our dealers appreciate we are all-in on them and that we are there to help them win. That is translating into more volume—the fruits of disciplined execution against Focus Forward. Yield will ebb and flow with mix and seasonality. We like the yield we saw in the first quarter.

It outperformed our expectations a bit. From first to second quarter, seasonality can drive S-tier concentration a little higher and put some pressure on yield. I would not get hung up on any single quarter’s yield. Strong application volume gives us flexibility to manage pull-through on volume, credit, and originated yield.

Our next question comes from Brian Foran with Truist.

Hi. On capital, you noted you are still evaluating IRBA. Is there any thought that IRBA might be better than the ~9.1% under RSA—worth opting in? And on Corporate Finance, growth looks great with 26% ROE and zero losses, but there is investor nervousness in the space. Qualitatively, what is driving the growth—team hires, competitors pulling back? And from an underwriting standpoint, are you tightening anywhere—raising pricing, lowering advance rates, marking collateral?

As we said, both proposals are constructive, though they are still proposals and could change. On the face of it, IRBA has the advantage of lower risk weights for certain categories, including retail auto loans, which are a big part of our balance sheet. There are also additional RWA categories, like operational risk, that offset some of that. As a Category IV bank, we would be in RSA by default and could opt in to IRBA with a one-year transition. We are evaluating both and will choose what best aligns capital with the risk in our book for the long term. On Corporate Finance, our team has been in place for decades and is credit-first. We do not chase growth. The book can ebb and flow due to lumpiness of paydowns and originations, and you have seen quarters where we shrank. We are pleased with the first quarter, but there have been no compromises on credit. There is a dynamic with the CLO market taking out some facilities; we are not compromising based on credit for growth.

Many of our commercial clients have also been in business for decades. When our clients do very well, they grow, and we grow with them. Much of the growth you are seeing is us growing with long-standing, trusted relationships. That is the best way to grow.

Our next question comes from Moshe Orenbuch with TD Cowen.

Thanks. On retail auto credit performance and outlook, you cited vintage roll-forward, used car values, and consumer performance. How do you expect that to evolve—should performance be increasingly better as we go through 2026? And on the Insurance business, profitability was strong, growth lower. Beyond weather, any trends we should be aware of, and anything that would accelerate growth in premiums written or revenues?

We have left our retail auto NCO guide for 2026 unchanged at 1.8% to 2.0%. Back in January, we described that as a down-the-middle guide. If the portfolio continues to perform as it has—flow-to-loss, used car prices, delinquency evolution—we expect to be in the middle of that range. Over a longer period, we originate to a 1.6% to 1.8% annualized NCO rate, and over years we would expect migration toward that area. For Insurance, earnings reflected lower weather losses and strong realized gains in the investment portfolio; last year’s first quarter had one-in-200-year weather events, so the comp was easier. Longer term, we are underwriting marginally lower-risk business—less concentration in higher-weather-risk states and more high-deductible policies—reducing volatility, albeit with lower premium for the same nominal vehicle values.

Our next question comes from Jeff Adelson with Morgan Stanley.

Good morning. On operating leverage, you have executed well on expense management—some benefit from card rolling off and no one-in-200-year weather event. How are you trending versus your expectations on expense, and where can you go from here? Any other opportunities to hone efficiency? And on tax refunds, they are trending up year to date. Do you expect any areas where that flows through—perhaps a pull-forward dynamic in applications, people using refunds for car purchases, or getting ahead of higher oil prices?

Thanks, Jeff. While year-over-year comps benefited from card in the base period and last year’s weather, our expense discipline is very much in play and you have seen it over several quarters. We provide a guide for the year on noninterest expenses and are sticking to up about 1% for 2026. Beyond 2026, we see long-term expense growth in the low to mid-single digits. We constantly reprioritize investment spend to maximize impact. On tax refunds, refunds were up about 11%, not the 20% some anticipated, but up meaningfully and likely helpful. There is a mix of macro factors—oil prices, consumer sentiment, personal savings. Putting it together, seasonality in the quarter was typical of what we would expect.

Our next question comes from John Pancari with Evercore.

Morning. On retail auto, you noted the $10 million loss on lease terminations tied to residuals. Can you give an updated outlook—how will that trend, and is it factored into the guide? Separately, you acknowledged a 5% decline in new light vehicle sales. What is your assumption there, and does that temper your 2% to 4% earning asset growth outlook?

On leases, the $10 million loss on lease terminations was a little favorable to what we expected when we spoke in January. The pressure we are seeing on a handful of PHEV models was consistent with expectations, and we saw some favorability in used car prices in the broader termination portfolio, providing an offset. We accelerated depreciation on certain near-term vintages related to those impacted PHEV models; our outlook for the year takes remaining pressure into account. On light vehicle sales, while industry sales were down, we still had two strong quarters in applications translating into strong originations. We feel good about momentum on retail auto loans and remain comfortable with earning asset growth guidance.

Thanks. On returns, you cited confidence in NIM despite rate fluctuations and favorable Basel implications. How does this impact your mid-teens ROTCE expectation—any changes and what is a reasonable timing?

No updates on timing. We continue to resist calling a specific quarter. Medium-term trends persist, and we have a high degree of confidence in meeting our mid-teens target.

Our next question comes from Mark DeVries with Deutsche Bank.

Thanks. On capital, Russ, I noticed you did not refer to “low and slow.” Was that a deliberate omission reflecting greater optimism about the pace of capital return, or am I reading too much into it?

You are probably reading too much into it. We are going to be dynamic. Our capital priorities are unchanged. We will be dynamic as we see origination opportunities in our core businesses where we generate accretive returns, and we will continue to build capital, support our dividend, and buy back shares.

Reflecting on the past few years, the fact that we are having a conversation about the pace of share repurchases is a testament to having the right strategy and disciplined execution. We feel really good about our strategic positioning and how we are teed up for the future, not just what we delivered this quarter.

Thank you, Michael. Right at the top of the hour, we will go ahead and wrap it for today. If you have any additional questions, as always, please feel free to reach out to Investor Relations. Thank you for joining us this morning. That concludes today's call.

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