Ally Financial Inc

Previous wording

•our ability to optimize our automotive finance and insurance businesses and to continue diversifying into and growing other consumer and commercial business lines, including mortgage lending, credit cards, corporate finance, brokerage, and personal advice;

Current wording

•our ability to optimize our automotive finance and insurance businesses and to continue diversifying into and growing other consumer and commercial business lines, including corporate finance, brokerage, and personal advice;

Previous wording

•policies and other actions of governments to manage and mitigate climate and related environmental risks, and the effects of climate change or the transition to a lower-carbon economy on our business, operations, and reputation; or

Current wording

•policies and other actions of governments to manage and mitigate climate and other sustainability issues, and the effects of climate change or the transition to a lower-carbon economy on our business, operations, and reputation; or

Previous wording

Ally Financial Inc. (together with its consolidated subsidiaries unless the context otherwise requires, Ally, the Company, we, us, or our) is a financial-services company with the nation’s largest all-digital bank and an industry-leading automotive financing and insurance business, driven by a mission to “Do It Right” and be a relentless ally for customers and communities. The Company serves customers through a full range of online banking services (including deposits, mortgage, and credit card products) and securities brokerage and investment advisory services. The Company also includes a corporate finance business that offers capital for equity sponsors and middle-market companies. Ally is a Delaware corporation and is registered as a BHC under the BHC Act and an FHC under the GLB Act.

Current wording

Ally Financial Inc. (together with its consolidated subsidiaries unless the context otherwise requires, Ally, the Company, we, us, or our) is a financial-services company with the nation’s largest all-digital bank and an industry-leading automotive financing and insurance business, driven by a mission to “Do It Right” and be a relentless ally for customers and communities. The Company serves customers with deposits and securities brokerage and investment advisory services as well as automotive financing and insurance offerings. The Company also includes a seasoned corporate finance business that offers capital for equity sponsors and middle-market companies. Ally is a Delaware corporation and is registered as a BHC under the BHC Act and an FHC under the GLB Act.

Previous wording

Dealer Financial Services, which includes our Automotive Finance and Insurance operations, Mortgage Finance, and Corporate Finance are our primary business lines. The remaining activity is reported in Corporate and Other, which primarily consists of centralized treasury activities as well as Ally Invest, our digital brokerage and personal advice offering, Ally Lending, Ally Credit Card, CRA loans and investments, and certain strategic investments. On March 1, 2024, we sold Ally Lending. For further information, refer to Note 2 to the Condensed Consolidated Financial Statements. The following table summarizes the operating results excluding discontinued operations of each business line. Operating results for each of the business lines are more fully described in the MD&A sections that follow.

Current wording

Dealer Financial Services, which includes our Automotive Finance and Insurance operations, and Corporate Finance are our primary business lines. The remaining activity is reported in Corporate and Other, which primarily consists of centralized treasury activities as well as Ally Invest, our digital brokerage and personal advice offering, Ally Lending, Ally Credit Card, the management of our consumer mortgage portfolio, CRA loans and investments, and certain strategic investments through Ally Ventures. We closed the sale of Ally Lending on March 1, 2024. Consumer mortgage originations will cease during the second quarter of 2025, which will result in a gradual run-off of our remaining consumer mortgage loan portfolio. Additionally, we closed the sale of Ally Credit Card on April 1, 2025. For further information, refer to Note 2 to the Condensed Consolidated Financial Statements. The following table summarizes the operating results excluding discontinued operations of each business line. Operating results for each of the business lines are more fully described in the MD&A sections that follow.

Previous wording

Our Automotive Finance operations include purchasing retail installment sales contracts and operating leases from dealers and automotive retailers, extending automotive loans directly to consumers, offering term loans to dealers, financing dealer floorplans and providing other lines of credit to dealers, supplying warehouse lines to automotive retailers, offering automotive-fleet financing, providing financing to companies and municipalities for the purchase or lease of vehicles, and supplying vehicle-remarketing services. Our success as an automotive finance provider is driven by the consistent and broad range of products and services we offer to dealers and automotive retailers. The automotive marketplace is dynamic and evolving, including substantial investments in electrification by automobile manufacturers and suppliers. We continue to identify and cultivate relationships with automotive retailers, including those with leading e-commerce platforms. We also operate an online direct-lending platform for consumers seeking direct financing. We believe these actions will enable us to respond to the growing trends for a more streamlined and digital automotive financing process to serve both dealers and consumers. Additionally, we provide comprehensive automotive remarketing services, including the use of SmartAuction, our online auction platform, which efficiently supports dealer-to-dealer and other commercial wholesale vehicle transactions. SmartAuction provides diversified fee-based revenue and serves as a means of deepening relationships with our dealership customers. Beyond offering a full suite of solutions for our dealership customers, we also offer application pass-through programs for credit applications that do not meet our underwriting criteria, allowing dealers to provide expanded access to credit for consumers and improve sales at their dealership. Through our pass-through programs, we are able to monetize our declined applications by generating a combination of acquisition fee and servicing revenue for loans that are originated, sold to, and serviced on behalf of a third-party lender, or one-time acquisition fees for loans funded and serviced by a third party. Furthermore, our strong and expansive dealer relationships, comprehensive suite of products and services, full-spectrum financing, and depth of experience position us to evolve with future shifts in automobile technologies, including electrification. We have provided and continue to provide automobile financing for battery-electric and plug-in hybrid vehicles, including brands such as Jeep, Tesla, Ford, and BMW. This positions us to remain a leader in automotive financing as we believe the majority of these vehicles will be sold through dealerships and automotive retailers with whom we have an established relationship. Additionally, we partner and build relationships with automotive manufacturers who use a direct-to-consumer model. During the nine months ended September 30, 2024…

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Current wording

Our Automotive Finance operations include purchasing retail installment sales contracts and operating leases from dealers and automotive retailers, extending automotive loans directly to consumers, offering term loans to dealers, financing dealer floorplans and providing other lines of credit to dealers, supplying warehouse lines to automotive retailers, offering automotive-fleet financing, providing financing to companies and municipalities for the purchase or lease of vehicles, and supplying vehicle-remarketing services. Our success as an automotive finance provider is driven by the consistent and broad range of products and services we offer to dealers and automotive retailers. The automotive marketplace is dynamic and evolving, including substantial investments in electrification by automotive manufacturers and suppliers. We continue to identify and cultivate relationships with automotive retailers, including those with leading e-commerce platforms. We also operate an online direct-lending platform for consumers seeking direct financing. We believe these products will enable us to respond to the growing trends for a more streamlined and digital automotive financing process to serve both dealers and consumers. Additionally, we provide comprehensive automotive remarketing services, including the use of SmartAuction, our online auction platform, which efficiently supports dealer-to-dealer and other commercial wholesale vehicle transactions. SmartAuction provides diversified fee-based revenue and serves as a means of deepening relationships with our dealership customers. Beyond offering a full suite of solutions for our dealership customers, we also offer application pass-through programs for credit applications that do not meet our underwriting criteria, allowing dealers to provide expanded access to credit for consumers and improve sales at their dealership. Through our pass-through programs, we are able to monetize our declined applications by generating a combination of acquisition fee and servicing revenue for loans that are originated, sold to, and serviced on behalf of a third-party lender, or one-time acquisition fees for loans funded and serviced by a third party. Furthermore, our strong and expansive dealer relationships, comprehensive suite of products and services, full-spectrum financing, and depth of experience position us to evolve with future shifts in automobile technologies, including electrification. We have provided and continue to provide automobile financing for battery-electric and plug-in hybrid vehicles, including brands such as Tesla, Jeep, Alfa Romeo, and Chevrolet. This positions us to remain a leader in automotive financing as we believe the majority of these vehicles will be sold through dealerships and automotive retailers with whom we have an established relationship. Additionally, we continue to partner and build relationships with automotive manufacturers who use a direct-to-consumer model. During the three month…

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Previous wording

We have focused on developing dealer relationships beyond those relationships that primarily were developed through our previous role as a captive finance company for GM and Stellantis. We have established relationships with thousands of automotive dealers through our customer-centric approach and specialized incentive programs designed to drive loyalty amongst dealers to our products and services. Outside of GM and Stellantis, our other OEM-franchised dealers include brands such as Ford, Toyota, Hyundai, Kia, Nissan, Honda, and others, including automotive manufacturers who use a direct-to-consumer model. Our non-OEM-franchised dealers and automotive retailers include used-vehicle-only retailers with a national presence, as well as online-only automotive retailers, such as Carvana, CarMax, and EchoPark.

Current wording

We have focused on developing dealer relationships beyond those relationships that primarily were developed through our previous role as a captive finance company for GM and a preferred provider for Stellantis. We have established relationships with thousands of automotive dealers through our customer-centric approach and specialized incentive programs designed to drive loyalty amongst dealers to our products and services. Outside of GM and Stellantis, our other OEM-franchised dealers include brands such as Ford, Toyota, Hyundai, Kia, Nissan, Honda, and others, including automotive manufacturers who use a direct-to-consumer model. Our non-OEM-franchised dealers and automotive retailers include used-vehicle-only retailers with a national presence, as well as online-only automotive retailers, such as Carvana, CarMax, and EchoPark.

Previous wording

Our Insurance operations offer both consumer finance protection and insurance products sold primarily through the automotive dealer channel, and commercial insurance products sold directly to dealers. We serve approximately 2.5 million consumers nationwide across F&I and P&C products. During 2024, we added relationships with Nissan and Toyota to our vehicle inventory insurance program. In addition, we offer F&I products in Canada, where we serve more than 450 thousand consumers and are the preferred VSC and other protection plan provider for GM Canada and VSC provider for Subaru Canada. Our contract to serve as the preferred VSC and protection plan provider for GM Canada extends into the third quarter of 2027.

Current wording

Our dealer F&I products are primarily distributed indirectly through the automotive dealer network which includes dealer relationships of approximately 1,500 in the U.S. where we serve 2.4 million consumers. As part of our focus on offering dealers a broad range of consumer F&I products, we offer VSCs, VMCs, and GAP products. Ally Premier Protection is our flagship VSC offering, which provides coverage for new and used vehicles of virtually all makes and models offering owners and lessees mechanical repair protection and roadside assistance beyond the manufacturer’s new vehicle warranty. Our GAP products cover certain amounts owed by a customer beyond their covered vehicle’s value in the event the vehicle is damaged or stolen and declared a total loss. We offer F&I products in Canada, where we serve over 500,000 consumers and are the preferred VSC and other protection plan provider for GM Canada and VSC provider for Subaru Canada. Our contract to serve as the preferred VSC and protection plan provider for GM Canada extends into the third quarter of 2027.

Previous wording

As part of our focus on offering dealers a broad range of consumer F&I products, we offer VSCs, VMCs, and GAP products. Ally Premier Protection is our flagship VSC offering, which provides coverage for new and used vehicles of virtually all makes and models. We also underwrite ClearGuard on the SmartAuction platform, which is a protection product designed to minimize the risk to dealers from arbitration claims for eligible vehicles sold at auction. Additionally, we underwrite selected commercial insurance coverages, which primarily insure dealers’ wholesale vehicle inventory, and offer additional products to protect a dealer’s business, including property and liability coverage that is underwritten by a third-party carrier with a portion of the insurance risk assumed through a quota share agreement. On a smaller scale, we also periodically assume other insurance risks through quota share arrangements and perform services as an underwriting carrier for an insurance program managed by a third party where we cede the majority of such business to external reinsurance markets.

Current wording

We also underwrite ClearGuard on the SmartAuction platform, which is a protection product designed to minimize the risk to dealers from arbitration claims for eligible vehicles sold at auction. On a smaller scale, we also periodically assume other non-automotive insurance risks through quota share arrangements and perform services as an underwriting carrier for insurance programs managed by a third party where we cede the majority of such business to external reinsurance markets.

Previous wording

Our dealer-centric business model, value-added products and services, full-spectrum financing, and business expertise proven over many credit cycles, make us a premier automotive finance and insurance company ready to support and strengthen our approximately 21,700 active dealer relationships as of September 30, 2024. A dealer is considered to have an active relationship with us if we provided automotive financing, remarketing, or insurance services during the three months ended September 30, 2024.

Current wording

Our dealer-centric business model, value-added products and services, full-spectrum financing, and business expertise proven over many credit cycles, make us a premier automotive finance and insurance company ready to support and strengthen over 21,000 active dealer relationships as of March 31, 2025. A dealer is considered to have an active relationship with us if we provided automotive financing, remarketing, or insurance services during the three months ended March 31, 2025.

Previous wording

•Our Corporate Finance operations primarily offer senior-secured loans to private equity sponsor-owned U.S.-based middle-market companies and to well-established asset managers that mostly provide leveraged loans. The portfolio is composed of floating-rate leveraged asset-based and cash flow/enterprise value loans. Our Corporate Finance operations had $10.4 billion of assets at September 30, 2024, and generated $406 million of total net revenue during the nine months ended September 30, 2024, and continues to offer attractive returns and diversification benefits to our broader lending portfolio. Our Sponsor Finance business focuses on companies owned by private-equity sponsors with loans typically used for leveraged buyouts, refinancing and recapitalizations, mergers and acquisitions, growth, turnarounds, and debtor-in-possession financings. Additionally, our Lender Finance business provides asset managers with facilities to partially fund their direct-lending activities. We also provide a commercial real estate product, currently focused on lending to skilled nursing facilities, senior housing, and medical office buildings.

Current wording

•Our Corporate Finance operations primarily offer senior-secured loans to private equity sponsor-owned U.S.-based middle-market companies and to well-established asset managers that mostly provide leveraged loans. The portfolio is composed of floating-rate leveraged asset-based and cash flow/enterprise value loans. Our Corporate Finance operations had $11.0 billion of assets at March 31, 2025, and generated $133 million of total net revenue during the three months ended March 31, 2025, and continues to offer attractive returns and diversification benefits to our broader lending portfolio. Our Sponsor Finance business focuses on companies owned by private-equity sponsors with loans typically used for leveraged buyouts, refinancing and recapitalizations, mergers and acquisitions, growth, co-lending arrangements, turnarounds, and debtor-in-possession financings. Additionally, our Lender Finance business provides asset managers and other financing sources with facilities to partially fund their direct-lending activities. We also provide a commercial real estate product, primarily focused on lending to skilled nursing facilities, senior housing, memory care facilities, and medical office buildings.

Previous wording

•Corporate and Other primarily consists of centralized corporate treasury activities such as management of the cash and corporate investment securities and loan portfolios, short- and long-term debt, retail and brokered deposit liabilities, derivative instruments, original issue discount, and the residual impacts of our corporate FTP and treasury ALM activities. Corporate and Other also includes activity related to certain equity investments, which primarily consist of FHLB and FRB stock, as well as other equity investments through Ally Ventures, our strategic investment business. Additionally, Corporate and Other includes the management of our legacy mortgage portfolio, which primarily consists of loans originated prior to January 1, 2009, CRA loans and investments, and reclassifications and eliminations between the reportable operating segments. Costs that are not allocated to our reportable operating segments as part of our COH methodology, which involves management judgment, are also included in Corporate and Other. These costs include marketing sponsorships, treasury and other corporate activities, and charitable contributions.

Current wording

•Corporate and Other primarily consists of centralized corporate treasury activities such as management of the cash and corporate investment securities and loan portfolios, short- and long-term debt, retail and brokered deposit liabilities, derivative instruments, original issue discount, and the residual impacts of our corporate FTP and treasury ALM activities. Corporate and Other also includes activity related to certain equity investments, which primarily consist of FHLB and FRB stock, as well as other equity investments through Ally Ventures, our strategic investment business. Additionally, Corporate and Other includes the management of our consumer mortgage portfolio, CRA loans and investments, and reclassifications and eliminations between the reportable operating segments. Costs that are not allocated to our reportable operating segments as part of our COH methodology, which involves management judgment, are also included in Corporate and Other. These costs include operating costs of deposits, treasury activities, and other corporate activities.

Previous wording

Corporate and Other includes our CRA loans. On October 24, 2023, the U.S. banking agencies issued a final rule to modernize their regulations related to the CRA. The final rule amends their CRA regulations by introducing new tests to evaluate the CRA performance of banks, which most significantly impacts banks with over $2 billion in assets and imposes additional requirements on banks with over $10 billion in assets. Major changes to the CRA regulations include modifications related to the delineation of assessment areas, the overall evaluation framework including performance standards and metrics, the definition of community development activities, and data collection and reporting. Most provisions of the final rule will become effective on January 1, 2026, and the data reporting requirements will become effective on January 1, 2027. While we are still evaluating the final rule, it could impact Ally including our CRA program, business strategies, allocation of resources, and technology requirements.

Current wording

Corporate and Other includes our CRA loans. On October 24, 2023, the U.S. banking agencies issued a final rule to modernize their regulations related to the CRA. The final rule amends their CRA regulations by introducing new tests to evaluate the CRA performance of banks, which most significantly impacts banks with over $2 billion in assets and imposes additional requirements on banks with over $10 billion in assets. Major changes to the CRA regulations include modifications related to the delineation of assessment areas, the overall evaluation framework including performance standards and metrics, the definition of community development activities, and data collection and reporting. Most provisions of the final rule will become effective on January 1, 2026, and the data reporting requirements will become effective on January 1, 2027. The final rule is stayed as to the plaintiff trade associations while a federal court considers the validity of the rule. On March 28, 2025, the U.S. banking agencies announced, in light of the pending litigation, their intent to issue a proposal to both rescind the final rule and reinstate the CRA framework that existed prior to the final rule.

Previous wording

(b)The common dividend payout ratio was calculated using basic earnings per common share.

Current wording

(b)During the three months ended March 31, 2025, we paid dividends of $0.30 per share and incurred a loss of $0.82 per share. Due to the relationship of this calculation and the net loss incurred, this ratio is not meaningful for the three months ended March 31, 2025. During the three months ended March 31, 2024, the common dividend payout ratio was calculated using basic earnings per common share.

Previous wording

Insurance premiums and service revenue earned was $359 million and $1.0 billion for the three months and nine months ended September 30, 2024, respectively, compared to $320 million and $936 million for the three months and nine months ended September 30, 2023. The increases for the three months and nine months ended September 30, 2024, were primarily driven by growth of our P&C vehicle inventory insurance program due to higher dealer inventory levels and the addition of new relationships with Nissan and Toyota. The increases were also driven by higher other premium and service revenue written from non-automotive assumed reinsurance business.

Current wording

Insurance premiums and service revenue earned was $364 million for the three months ended March 31, 2025, compared to $345 million for the three months ended March 31, 2024. The increase for the three months ended March 31, 2025, was primarily driven by growth of our vehicle inventory insurance program due to higher dealer inventory levels and growth in new relationships.

Previous wording

Other gain on investments, net was $74 million and $96 million for the three months and nine months ended September 30, 2024, respectively, compared to other loss on investments, net of $41 million and other gain on investments, net of $59 million for the three months and nine months ended September 30, 2023. The increases for the three months and nine months ended September 30, 2024, compared to the same periods in 2023, were primarily attributable to the performance of the equity securities included in the portfolio in line with broader market performance.

Current wording

Other loss on investments, net was $499 million for the three months ended March 31, 2025, compared to other gain on investments, net of $29 million for the three months ended March 31, 2024. The decrease for the three months ended March 31, 2025, compared to the same period in 2024, was primarily attributable to our balance sheet repositioning of a portion of our available-for-sales securities and unfavorable performance from equity securities. Refer to Note 7 to the Condensed Consolidated Financial Statements for additional information.

Previous wording

Total other revenue increased $15 million and $14 million for the three months and nine months ended September 30, 2024, respectively, compared to the three months and nine months ended September 30, 2023. The increases for the three months and nine months ended September 30, 2024, as compared to the same periods in 2023, were primarily driven by favorable performance from our equity securities and equity-method investments.

Current wording

Other income, net of losses increased $47 million for the three months ended March 31, 2025, compared to the three months ended March 31, 2024. The increase for the three months ended March 31, 2025, was primarily driven by favorable performance from equity-method investments.

Previous wording

Consumer automotive loan financing revenue and other interest income increased $141 million and $561 million for the three months and nine months ended September 30, 2024, respectively, compared to the same periods in 2023. Higher portfolio yields resulting from pricing actions taken in response to rising benchmark interest rates contributed to the increases in revenue. The increases were partially offset by lower average consumer assets resulting from the transfers of financial assets to nonconsolidated SPEs. Refer to Note 10 to the Condensed Consolidated Financial Statements for additional information regarding assets sold to nonconsolidated SPEs.

Current wording

Consumer automotive loan financing revenue and other interest income increased $70 million for the three months ended March 31, 2025, compared to the same period in 2024. The increase was primarily driven by higher portfolio yields as higher yielding originations replace maturity of lower yielding assets resulting from pricing actions. The increase was partially offset by lower average consumer assets resulting from the transfers of financial assets to nonconsolidated SPEs. Refer to Note 10 to the Condensed Consolidated Financial Statements for additional information regarding assets sold to nonconsolidated SPEs.

Previous wording

Commercial loan financing revenue and other interest income increased $68 million and $280 million for the three months and nine months ended September 30, 2024, respectively, compared to the three months and nine months ended September 30, 2023. The increases were primarily due to higher asset balances resulting from improvements in new vehicle supply. The increases were also impacted by higher yields from higher benchmark interest rates, as our commercial automotive loans are generally variable-rate.

Current wording

Commercial loan financing revenue and other interest income decreased $70 million for the three months ended March 31, 2025, compared to the three months ended March 31, 2024. The decrease was primarily due to lower yield driven by lower benchmark interest rates, as our commercial automotive loans are generally variable-rate, and lower average outstanding wholesale floorplan balances within the Stellantis dealer channel.

Previous wording

Interest expense was $1.2 billion and $3.3 billion for the three months and nine months ended September 30, 2024, respectively, compared to $927 million and $2.5 billion for the three months and nine months ended September 30, 2023. The increases for the three months and nine months ended September 30, 2024, were primarily driven by a higher interest rate environment, resulting in higher funding costs.

Current wording

Interest expense was $1.1 billion for the three months ended March 31, 2025, compared to $1.0 billion for the three months ended March 31, 2024. The increase for the three months ended March 31, 2025, was primarily driven by higher funding costs as a result of a gradual shift in the composition of our consumer portfolios to loans and leases originated during a higher interest rate environment.

Previous wording

(c)Excludes the effects of derivative financial instruments designated as hedges, which is included within Corporate and Other. Including the impact of hedging activities, the yield was 9.29% and 9.18% for the three months and nine months ended September 30, 2024, respectively, and 8.90% and 8.73% for the three months and nine months ended September 30, 2023.

Current wording

(c)Excludes the effects of derivative financial instruments designated as hedges, which is included within Corporate and Other. Including the impact of hedging activities, the yield was 9.20% and 9.06% for the three months ended March 31, 2025, and 2024, respectively.

Previous wording

(d)Excludes the effects of derivative financial instruments designated as hedges, which is included within Corporate and Other. Including the impact of hedging activities, the yield was 7.68% and 7.67% for the three months and nine months ended September 30, 2024, respectively, and 7.88% and 7.64% for the three months and nine months ended September 30, 2023.

Current wording

(d)Excludes the effects of derivative financial instruments designated as hedges, which is included within Corporate and Other. Including the impact of hedging activities, the yield was 6.50% and 7.69% for the three months ended March 31, 2025, and 2024, respectively.

Previous wording

(f)Yield includes net gains on the sale of off-lease vehicles of $24 million and $129 million for the three months and nine months ended September 30, 2024, respectively, compared to $57 million and $174 million for the three months and nine months ended September 30, 2023. Excluding these gains on sale, the yield was 4.33% and 4.55% for the three months and nine months ended September 30, 2024, respectively, compared to 4.69% and 4.85% for the three months and nine months ended September 30, 2023.

Current wording

(f)Yield includes net losses on the sale of off-lease vehicles of $19 million and net gains of $46 million for the three months ended March 31, 2025, and 2024, respectively. Excluding these losses and gains on sale, the yield was 6.66% and 5.38% for the three months ended March 31, 2025, and 2024, respectively.

Previous wording

During the three months and nine months ended September 30, 2024, our portfolio yield for consumer automotive loans, excluding the impact of hedging activities, increased 87 and 96 basis points, respectively, as compared to the same periods in 2023. The increases for the three months and nine months ended September 30, 2024, were primarily driven by higher portfolio yields resulting from pricing actions. We continued to opportunistically adjust pricing in response to elevated benchmark interest rates and competition in the industry. Our portfolio yield for consumer automotive loans, including the effects of derivative financial instruments designated as hedges, was 30 and 36 basis points higher than our portfolio yield for consumer automotive loans excluding the effects of derivative financial instruments designated as hedges for the three months and nine months ended September 30, 2024, respectively. This is attributable to the execution of hedging strategies that are used to mitigate interest rate risks. The effects of derivative financial instruments designated as hedges are included within Corporate and Other. Refer to Note 19 to the Condensed Consolidated Financial Statements for further discussion.

Current wording

During the three months ended March 31, 2025, our portfolio yield for consumer automotive loans, excluding the impact of hedging activities, increased 47 basis points, compared to the same period in 2024. The increase for the three months ended March 31, 2025, was primarily driven by a shift in portfolio mix as higher yielding originations replace the maturity of lower yielding assets resulting from pricing actions. Our portfolio yield for consumer automotive loans, including the effects of derivative financial instruments designated as hedges, was 10 basis points higher than our portfolio yield for consumer automotive loans excluding the effects of derivative financial instruments designated as hedges for the three months ended March 31, 2025. This is attributable to the execution of hedging strategies that are used to mitigate interest rate risks. The effects of derivative financial instruments designated as hedges are included within Corporate and Other. Refer to Note 19 to the Condensed Consolidated Financial Statements for further discussion.

Previous wording

Retail loan originations with a term of 76 months or more represented 24% and 23%, of total retail loan originations for the three months and nine months ended, respectively, as of both September 30, 2024, and 2023. Substantially all the loans originated with a term of 76 months or more during both the three months and nine months ended September 30, 2024, and 2023, were considered to be prime and in credit tiers S, A, or B. Our underwriting processes are designed to consider various deal structure variables—such as payment-to-income, LTV, debt-to-income, and FICO® score—that compensate for longer loan terms and mitigate underwriting risk.

Current wording

Retail loan originations with a term of 76 months or more represented 23% of total retail loan originations for the three months ended March 31, 2025, compared to 22% for the three months ended March 31, 2024. Substantially all the loans originated with a term of 76 months or more during both the three months ended March 31, 2025, and 2024, were considered to be prime and in credit tiers S, A, or B. Our underwriting processes are designed to consider various deal structure variables—such as payment-to-income, LTV, debt-to-income, and FICO® score—that compensate for longer loan terms and mitigate underwriting risk.

Previous wording

During the three months ended September 30, 2024, approximately 84% of our used retail loan originations were for vehicles with a model year of 2018 or newer. According to the Bureau of Transportation Statistics, the average age of light vehicles in operation in the United States during 2023 was approximately 13 years. Substantially all used retail loan originations with a term of 76 months or more during the three months ended September 30, 2024, were for vehicles with a model year of 2018 or newer.

Current wording

During the three months ended March 31, 2025, approximately 81% of our used retail loan originations were for vehicles with a model year of 2019 or newer. According to the Bureau of Transportation Statistics, the average age of light vehicles in operation in the United States during 2024 was approximately 13 years. Substantially all used retail loan originations with a term of 76 months or more during the three months ended March 31, 2025, were for vehicles with a model year of 2019 or newer.

Previous wording

(a)Includes CSG originations of $856 million and $1.2 billion for the three months ended September 30, 2024, and 2023, respectively.

Current wording

(a)Includes CSG originations of $891 million and $1.1 billion for the three months ended March 31, 2025, and 2024, respectively.

Previous wording

The following tables present the percentage of retail loan and operating lease originations and purchases, in dollars, by FICO® Score and product type. We define prime consumer automotive loans primarily as those loans with a FICO® Score at origination of 620 or greater.

Current wording

The following table presents the percentage of retail loan and operating lease originations and purchases, in dollars, by FICO® Score and product type. We define prime consumer automotive loans primarily as those loans with a FICO® Score at origination of 620 or greater.

Previous wording

Originations with a FICO® Score of less than 620 (considered nonprime) represented 8% of total consumer loan and operating lease originations for both the three months and nine months ended September 30, 2024, compared to 8% and 9% for the three months and nine months ended September 30, 2023, respectively. Consumer loans and operating leases with FICO® Scores of less than 540 represented 1% of total originations for both the three months and nine months ended September 30, 2024, as compared to 2% of total originations for both the three months and nine months ended September 30, 2023. Nonprime applications are subject to more stringent underwriting criteria (for example, maximum payment-to-income ratio, maximum debt-to-income ratio, and maximum amount financed), and our nonprime loan portfolio generally does not include any loans with a term of 76 months or more. The carrying value of our held-for-investment, nonprime consumer automotive loans before allowance for loan losses was $8.1 billion and $8.7 billion at September 30, 2024, and December 31, 2023, respectively, or approximately 9.7% and 10.3% of our total consumer automotive loans at September 30, 2024, and December 31, 2023, respectively. For discussion of our credit-risk-management practices and performance, refer to the section below titled Risk Management.

Current wording

Originations with a FICO® Score of less than 620 (considered nonprime) represented 8% of total consumer loan and operating lease originations for the three months ended March 31, 2025, compared to 9% for the three months ended March 31, 2024. Consumer loans and operating leases with FICO® Scores of less than 540 represented 1% of total originations for the three months ended March 31, 2025, as compared to 2% of total originations for the same period in 2024. Nonprime applications are subject to more stringent underwriting criteria (for example, maximum payment-to-income ratio, maximum debt-to-income ratio, and maximum amount financed), and our nonprime loan portfolio generally does not include any loans with a term of 76 months or more. The carrying value of our held-for-investment, nonprime consumer automotive loans before allowance for loan losses was $8.1 billion and $8.2 billion at March 31, 2025, and December 31, 2024, respectively, or approximately 9.6% and 9.7% of our total consumer automotive loans at March 31, 2025, and December 31, 2024, respectively. For discussion of our credit-risk-management practices and performance, refer to the section below titled Risk Management.

Previous wording

During the first quarter of 2024, we amended our relationship with Carvana, a leading e-commerce platform for buying and selling used vehicles. Specifically, we maintained our committed facility at a maximum of $4.0 billion to support our continued efforts to optimize risk-adjusted returns. This commitment is effective for 364 days. As part of the agreement, we continue to purchase finance receivables on a periodic basis within prescribed eligibility requirements and risk appetite, consistent with purchase practices in prior years. All the finance receivables purchased through this channel are used vehicles, and are included in non-OEM-franchised dealers and automotive retailers in our consumer origination metrics. While different vintages and credit tiers exhibit varying performance, collectively to date, finance receivables purchased from Carvana have generally exhibited consistent delinquency and loss performance compared to loans with similar credit characteristics acquired through our indirect dealer channel. Consumer finance receivables and loans sourced from Carvana represented 8.4% and 8.2% of our total consumer automotive finance receivables and loans as of September 30, 2024, and December 31, 2023, respectively. Loan purchases from Carvana were 8% and 7% of our total consumer automotive financing originations during the three months and nine months ended September 30, 2024, respectively, as compared to 9% for both of the same periods in 2023.

Current wording

During the first quarter of 2025, we renewed our relationship with Carvana, a leading e-commerce platform for buying and selling used vehicles. Specifically, we maintained our committed facility at a maximum of $4.0 billion to support our continued efforts to optimize risk-adjusted returns. This commitment is effective for 364 days. As part of the agreement, we continue to purchase finance receivables on a periodic basis within prescribed eligibility requirements and risk appetite, consistent with purchase practices in prior years. All the finance receivables purchased through this channel are used vehicles, and are included in non-OEM-franchised dealers and automotive retailers in our consumer origination metrics. While different vintages and credit tiers exhibit varying performance, collectively to date, finance receivables purchased from Carvana have generally exhibited consistent delinquency and loss performance compared to loans with similar credit characteristics acquired through our indirect dealer channel. Consumer finance receivables and loans sourced from Carvana represented 8.6% of our total consumer automotive finance receivables and loans as of both March 31, 2025, and December 31, 2024. Loan purchases from Carvana were 7% of our total consumer automotive financing originations during the three months ended March 31, 2025, as compared to 9% during the three months ended March 31, 2024.

Previous wording

Average commercial wholesale financing receivables outstanding increased $3.0 billion and $3.7 billion during the three months and nine months ended September 30, 2024, respectively, as compared to the same periods in 2023. The increases for the three months and nine months ended September 30, 2024, as compared to the same periods in 2023, were primarily due to an increase in dealer new vehicle inventory levels, which is consistent with broader industry trends.

Current wording

Average commercial wholesale financing receivables outstanding decreased $1.5 billion during the three months ended March 31, 2025, as compared to the same period in 2024. The decrease for the three months ended March 31, 2025, as compared to the same period in 2024, was primarily due to a decrease within the Stellantis dealer channel.

Previous wording

Carvana's commercial line of credit totals $1.5 billion, with a scheduled maturity in the third quarter of 2025. The line of credit represents a commitment to fund Carvana’s wholesale floorplan financing of used vehicles and is consistent in form and structure with our other wholesale floorplan financing arrangements. This includes the line of credit being fully collateralized to mitigate counterparty credit risk in the event of a default. At September 30, 2024, Carvana’s gross wholesale floorplan assets outstanding balance was $76 million.

Current wording

Carvana's commercial line of credit totals $1.5 billion, with a scheduled maturity in the second quarter of 2025. The line of credit represents a commitment to fund Carvana’s wholesale floorplan financing of used vehicles and is consistent in form and structure with our other wholesale floorplan financing arrangements. This includes the line of credit being fully collateralized to mitigate counterparty credit risk in the event of a default. At March 31, 2025, Carvana’s gross wholesale floorplan assets outstanding balance was $64 million.

Previous wording

We also provide other forms of commercial financing for the automotive industry including automotive dealer term and revolving loans and automotive fleet financing. Automotive dealer term and revolving loans are loans that we make to dealers to finance other aspects of the dealership business, including acquisitions. These loans are usually secured by real estate or other dealership assets and are typically personally guaranteed by the individual owners of the dealership. Additionally, these loans generally include cross-collateral and cross-default provisions. Automotive fleet financing credit lines may be obtained by dealers, their affiliates, and other independent companies that are used to purchase vehicles, which they lease or rent to others. The average balances of other commercial automotive loans increased $325 million and $460 million for the three months and nine months ended September 30, 2024, respectively, compared to the same periods in 2023, to an average of $6.3 billion and $6.4 billion for the three months and nine months ended September 30, 2024.

Current wording

We also provide other forms of commercial financing for the automotive industry including automotive dealer term and revolving loans and automotive fleet financing. Automotive dealer term and revolving loans are loans that we make to dealers to finance other aspects of the dealership business, including acquisitions. These loans are usually secured by real estate or other dealership assets and are typically personally guaranteed by the individual owners of the dealership. Additionally, these loans generally include cross-collateral and cross-default provisions. Automotive fleet financing credit lines may be obtained by dealers, their affiliates, and other independent companies that are used to purchase vehicles, which they lease or rent to others. The average balances of other commercial automotive loans was $6.3 billion for both the three months ended March 31, 2025, and 2024.

Previous wording

(a)Includes interest expense of $12 million and $33 million for the three months and nine months ended September 30, 2024, respectively, and $8 million and $23 million for the three months and nine months ended September 30, 2023.

Current wording

(a)Includes interest expense of $14 million and $13 million for the three months ended March 31, 2025, and 2024, respectively.

Previous wording

(b)Includes net unrealized gains on equity securities of $56 million and $46 million for the three months and nine months ended September 30, 2024, respectively, and net unrealized losses on equity securities of $47 million for the three months ended September 30, 2023, and gains of $42 million for the nine months ended September 30, 2023.

Current wording

(b)Includes net unrealized losses on equity securities of $15 million for the three months ended March 31, 2025, and net unrealized gains of $17 million for the three months ended March 31, 2024.

Previous wording

Our Insurance operations earned income from continuing operations before income tax expense of $102 million and $130 million for the three months and nine months ended September 30, 2024, respectively, compared to a loss of $16 million for the three months ended September 30, 2023, and income of $84 million for the nine months ended September 30, 2023. The increases for the three months and nine months ended September 30, 2024, were primarily driven by higher net investment gains and increases in insurance premiums and service revenue earned, partially offset by increases in insurance losses and loss adjustment expenses.

Current wording

Our Insurance operations earned income from continuing operations before income tax expense of $2 million for the three months ended March 31, 2025, compared to $70 million for the same period in 2024. The decrease for the three months ended March 31, 2025, was primarily driven by an increase in insurance losses and loss adjustment expenses and lower net investment gains, partially offset by an increase in insurance premiums and service revenue earned.

Previous wording

Insurance premiums and service revenue earned was $359 million and $1.0 billion for the three months and nine months ended September 30, 2024, respectively, compared to $320 million and $936 million for the same periods in 2023. The increases for the three months and nine months ended September 30, 2024, were primarily driven by growth of our P&C vehicle inventory insurance program due to higher dealer inventory levels and the addition of new relationships with Nissan and Toyota. The increases were also driven by higher other premium and service revenue written from non-automotive assumed reinsurance business.

Current wording

Insurance premiums and service revenue earned was $364 million for the three months ended March 31, 2025, compared to $345 million for the same period in 2024. The increase for the three months ended March 31, 2025, was primarily driven by growth of our vehicle inventory insurance program due to higher dealer inventory levels and growth in new relationships.

Previous wording

Other gain on investments, net was $75 million and $104 million for the three months and nine months ended September 30, 2024, respectively, compared to other loss on investments, net of $31 million and other gain on investments, net of $66 million for the same periods in 2023. The increases for the three months and nine months ended September 30, 2024, were driven by unrealized gains on equity securities, net of $56 million and $46 million, respectively, compared to unrealized losses on equity securities, net of $47 million and unrealized gains on equity securities, net of $42 million during the same periods in 2023, as a result of the performance of the equity securities included in the portfolio in line with broader market performance. Additionally, the increases were driven by realized capital gains of $19 million and

Current wording

Other loss on investments, net was $4 million for the three months ended March 31, 2025, compared to gain on investments, net of $35 million for the same period in 2024. This consisted of realized capital gains of $11 million during the three months ended March 31, 2025, compared to $18 million for the same period in 2024. The decrease for the three months ended March 31, 2025, was driven by net unrealized losses on equity securities of $15 million, compared to net unrealized gains on equity securities of $17 million during the same period in 2024, as a result of the performance of the equity securities included in the portfolio in line with broader market performance.

Previous wording

Insurance losses and loss adjustment expenses totaled $135 million and $428 million for the three months and nine months ended September 30, 2024, respectively, compared to $107 million and $329 million for the same periods in 2023. Loss and loss adjustment expenses for the three months and nine months ended September 30, 2024, increased primarily due to growth in our P&C business, higher GAP losses driven by increased loss frequency and severity as vehicle values have declined from prior year, and growth in non-automotive assumed reinsurance business. During the three months and nine months ended September 30, 2024, weather-related loss and loss adjustment expenses from our vehicle inventory insurance program were $26 million and $121 million, respectively, compared to $22 million and $87 million during the same periods in 2023. We utilized our excess of loss reinsurance and ceded weather-related losses on our vehicle inventory insurance program for all quarters of 2024 as losses exceeded the retention limit, helping to mitigate the impact of weather losses, primarily due to severe hailstorms and Hurricane Helene. In April 2024, we renewed our annual excess of loss reinsurance agreement and continue to utilize this coverage for our vehicle inventory insurance to manage our risk of weather-related losses under which retention limits vary for each quarter.

Current wording

Insurance losses and loss adjustment expenses totaled $161 million for the three months ended March 31, 2025, compared to $112 million for the same period in 2024. Loss and loss adjustment expenses for the three months ended March 31, 2025, increased primarily due to significantly higher weather losses. During the three months ended March 31, 2025, weather-related loss and loss adjustment expenses from our vehicle inventory insurance program was $58 million, compared to $17 million during the same period in 2024. We utilized our excess of loss reinsurance and ceded weather-related losses on our vehicle inventory insurance program for the first quarter of 2025 as losses exceeded the retention limit, helping to partially mitigate the impact of weather losses, primarily due to severe hailstorms. In April 2025, we renewed our annual excess of loss reinsurance agreement and continue to utilize this coverage for our vehicle inventory insurance to manage our risk of weather-related losses, under which retention limits vary for each quarter.

Previous wording

Insurance premiums and service revenue written was $384 million and $1.1 billion for the three months and nine months ended September 30, 2024, respectively, compared to $335 million and $941 million for the same periods in 2023. The increases were primarily due to higher written premiums from our P&C business from rising dealer inventory levels and growth in vehicle inventory insurance program relationships, increasing our market share. Additionally, the increases were driven by higher written premium for F&I driven by higher volume in Canada and growth in other premium and service revenue written from non-automotive assumed reinsurance business.

Current wording

Insurance premiums and service revenue written was $385 million for the three months ended March 31, 2025, compared to $354 million for the same period in 2024. The increase was primarily due to higher written premiums from our P&C business from rising dealer inventory levels and growth in vehicle inventory insurance program relationships, increasing our market share.

Previous wording

In addition to these cash and investment securities, the Insurance segment has interest-bearing intercompany arrangements with Corporate and Other, callable on demand. The intercompany loan balance due to Insurance was $826 million and $619 million at September 30, 2024, and December 31, 2023, respectively. Related interest income of $4 million and $11 million was recognized for the three months and nine months ended September 30, 2024, respectively, and $2 million and $7 million was recognized for the three months and nine months ended September 30, 2023.

Current wording

In addition to these cash and investment securities, the Insurance segment has interest-bearing intercompany arrangements with Corporate and Other, callable on demand. The intercompany loan balance due to Insurance was $804 million and $864 million at March 31, 2025, and December 31, 2024, respectively, and related interest income of $5 million and $3 million was recognized for the three months ended March 31, 2025, and March 31, 2024, respectively.