Ally Financial Inc.

Previous 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.

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 ceased 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 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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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 six months …

Excerpt shortened here; the source contains the full paragraph.

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 $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.

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 asset-based and leveraged cash flow/enterprise value loans. Our Corporate Finance operations had $11.0 billion of assets at June 30, 2025, and generated $260 million of total net revenue during the six months ended June 30, 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 Private Credit 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 includes the financial results of our mortgage operations, which consist of our held-for-sale and held-for-investment consumer mortgage loan portfolios. 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.

Current wording

Corporate and Other includes the financial results of our mortgage operations, which consist of our held-for-sale and held-for-investment consumer mortgage loan portfolios. Consumer mortgage originations ceased during the second quarter of 2025, which will result in a gradual run-off of our remaining consumer mortgage loan portfolio.

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. 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.

Current wording

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 July 15, 2025, the FDIC Board of Directors voted to approve a notice of proposed rulemaking to be issued with the Federal Reserve and the Office of the Comptroller of the Currency to both rescind the CRA final rule and reinstate the CRA framework that existed prior to the final rule, with certain technical amendments.

Previous 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.

Current wording

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

Previous wording

We incurred a loss from continuing operations of $225 million for the three months ended March 31, 2025, compared to income earned of $143 million for the three months ended March 31, 2024. The decrease in income for the three months ended March 31, 2025, was primarily driven by other loss on investments, net, and higher total noninterest expense, partially offset by lower provision for credit losses and a decrease in income tax expense from continuing operations.

Current wording

We earned net income from continuing operations of $352 million and $127 million for the three months and six months ended June 30, 2025, respectively, compared to $219 million and $362 million for the three months and six months ended June 30, 2024. The increase in income for the three months ended June 30, 2025, was primarily driven by lower provision for credit losses, other gain on investments, net, and lower total noninterest expense, partially offset by an increase in tax expense from continuing operations. The decrease in income for the six months ended June 30, 2025, was primarily driven by other loss on investments, net, and higher total noninterest expense, partially offset by lower provision for credit losses and a decrease in income tax expense from continuing operations.

Previous wording

Net financing revenue and other interest income increased $10 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 lower total interest expense, in response to lower benchmark interest rates, which decreased our cost of funds associated with our deposit liabilities. The increase was partially offset by lower commercial automotive financing revenue, which decreased 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. Additionally, the increase was partially offset by higher net depreciation expense on operating lease assets.

Current wording

Net financing revenue and other interest income decreased $1 million for the three months ended June 30, 2025, and increased $9 million for the six months ended June 30, 2025, as compared to the same periods in 2024. The decrease for the three months ended June 30, 2025, was primarily driven by the sale of Ally Credit Card, which closed on April 1, 2025, and unfavorable remarketing performance on our operating leases resulting from lower auction prices on the sale of specific vehicle models and lower termination volume. The decrease was partially offset by lower total interest expense in response to lower benchmark interest rates, which decreased our cost of funds associated with our deposit liabilities. The increase for the six months ended June 30, 2025, was primarily driven by lower total interest expense in response to lower benchmark interest rates, partially offset by unfavorable remarketing performance on our operating leases and the sale of Ally Credit Card.

Previous 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.

Current wording

Other gain (loss) on investments, net, was a gain of $61 million and a loss of $438 million for the three months and six months ended June 30, 2025, respectively, compared to a loss of $7 million and a gain of $22 million for the three months and six months ended June 30, 2024. The increase for the three months ended June 30, 2025, was primarily due to favorable performance from equity securities. The decrease for the six months ended June 30, 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 during the six months ended June 30, 2025. Refer to Note 7 to the Condensed Consolidated Financial Statements for additional information.

Previous 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.

Current wording

Other income, net of losses, decreased $15 million for the three months ended June 30, 2025, and increased $32 million for the six months ended June 30, 2025, compared to the same periods in 2024. The decrease for the three months ended June 30, 2025, was due to lower late charges and other administrative fees as a result of the sale of Ally Credit Card. The increase for the six months ended June 30, 2025, was primarily driven by favorable performance from equity-method investments, partially offset by lower late charges and other administrative fees.

Previous wording

The provision for credit losses decreased $316 million for the three months ended March 31, 2025, compared to the three months ended March 31, 2024. The decrease in provision for credit losses for the three months ended March 31, 2025, was primarily driven by a provision benefit from the transfer of Ally Credit Card to operations held-for-sale and lower net charge-offs within our consumer automotive portfolio, partially offset by higher specific reserve activity within our commercial automotive portfolio and portfolio growth in our Corporate Finance segment. Refer to the Risk Management section of this MD&A for further discussion on our provision for credit losses.

Current wording

The provision for credit losses decreased $73 million and $389 million for the three months and six months ended June 30, 2025, respectively, compared to the three months and six months ended June 30, 2024. The decrease in provision for credit losses for the three months ended June 30, 2025, was primarily driven by lower net charge-offs within our consumer other portfolio due to the sale of Ally Credit Card. The decrease in provision for credit losses for the six months ended June 30, 2025, was primarily driven by a provision benefit associated with the sale of Ally Credit Card and lower net charge-offs within our consumer automotive portfolio, partially offset by portfolio growth in our Corporate Finance operations, as well as higher specific reserve activity within our commercial automotive portfolio. Refer to the Risk Management section of this MD&A for further discussion on our provision for credit losses.

Previous wording

Noninterest expense increased $326 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 the impairment of goodwill related to the transfer of Ally Credit Card to operations held-for-sale. Additionally, the increase was driven by higher insurance losses and loss adjustment expenses from our vehicle inventory insurance program. The increase was partially offset by lower operating expenses and lower compensation and benefits.

Current wording

Noninterest expense decreased $24 million for the three months ended June 30, 2025, and increased $302 million for the six months ended June 30, 2025, compared to the same periods in 2024. The decrease for the three months ended June 30, 2025, was primarily due to lower operating expenses and lower compensation and benefits, partially offset by higher insurance losses and loss adjustment expenses from higher weather losses driven by growth in our vehicle inventory insurance business. The increase for the six months ended June 30, 2025, was primarily driven by the impairment of goodwill associated with the sale of Ally Credit Card, in addition to higher insurance losses and loss adjustment expenses from our vehicle inventory insurance business. The increase was partially offset by lower operating expenses and lower compensation and benefits.

Previous wording

We recognized total income tax benefit from continuing operations of $59 million for the three months ended March 31, 2025, compared to income tax expense of $40 million for the three months ended March 31, 2024. The decrease in income tax expense for the three months ended March 31, 2025, compared to the same period in 2024, was primarily attributable to the tax effects of a loss on investments recognized as a result of our balance sheet repositioning of a portion of our available-for-sale securities during the three months ended March 31, 2025. Refer to Note 20 to the Condensed Consolidated Financial Statements for further discussion.

Current wording

We recognized total income tax expense from continuing operations of $84 million and $25 million for the three months and six months ended June 30, 2025, respectively, compared to income tax expense of $60 million and $100 million for the three months and six months ended June 30, 2024. The increase in income tax expense for the three months ended June 30, 2025, compared to the same period in 2024, was primarily due to the tax effects of an increase in pretax earnings during the three months ended June 30, 2025. This increase was partially offset by an income tax benefit from the revaluation of our deferred tax assets and liabilities as a result of a California tax law enacted during the second quarter of 2025. The decrease in income tax expense for the six months ended June 30, 2025, compared to the same period in 2024, was primarily attributable to the tax effects of a loss on investments recognized as a result of our balance sheet repositioning of a portion of our available-for-sale securities during the six months ended June 30, 2025, as well as the aforementioned income tax benefit from the revaluation of our deferred tax assets and liabilities.

Previous wording

(a)Includes net remarketing losses of $19 million and net remarketing gains of $46 million for the three months ended March 31, 2025, and 2024, respectively.

Current wording

(a)Includes net remarketing losses of $19 million for the six months ended June 30, 2025, compared to net remarketing gains of $59 million and $105 million for the three months and six months ended June 30, 2024, respectively.

Previous wording

Our Automotive Finance operations earned income from continuing operations before income tax expense of $375 million for the three months ended March 31, 2025, compared to $480 million for the three months ended March 31, 2024. For the three months ended March 31, 2025, the decrease was primarily due to higher interest expense and net depreciation expense on operating lease assets.

Current wording

Our Automotive Finance operations earned income from continuing operations before income tax expense of $472 million and $847 million for the three months and six months ended June 30, 2025, respectively, compared to $584 million and $1.1 billion for the three months and six months ended June 30, 2024. For the three months and six months ended June 30, 2025, the decreases were primarily due to higher net depreciation expense on operating lease assets.

Previous 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.

Current wording

Consumer automotive loan financing revenue and other interest income increased $81 million and $151 million for the three months and six months ended June 30, 2025, respectively, compared to the same periods in 2024. The increases were primarily driven by higher portfolio yields as higher yielding originations replace maturity of lower yielding assets resulting from pricing actions.

Previous 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.

Current wording

Commercial loan financing revenue and other interest income decreased $106 million and $176 million for the three months and six months ended June 30, 2025, respectively, compared to the three months and six months ended June 30, 2024. The decreases were primarily due to lower average outstanding wholesale floorplan balances within the Stellantis dealer channel and lower yield driven by lower benchmark interest rates, as our commercial automotive loans are generally variable-rate.

Previous 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.

Current wording

Interest expense increased $28 million and $83 million for the three months and six months ended June 30, 2025, compared to the same periods in 2024. The increases for the three months and six months ended June 30, 2025, were 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

Total net operating lease revenue decreased $53 million for the three months ended March 31, 2025, compared to the same period in 2024. The decrease in net operating lease revenue was driven by lower remarketing performance, and lower asset balances. We recognized net remarketing losses of $19 million for the three months ended March 31, 2025, compared to net remarketing gains $46 million for the three months ended March 31, 2024. The decrease in remarketing gains was primarily driven by lower auction prices, which included approximately $20 million of losses on the sale of two specific ICE vehicle models. Refer to the Operating Lease Residual Risk Management section of this MD&A for further discussion.

Current wording

Total net operating lease revenue decreased $42 million and $95 million for the three months and six months ended June 30, 2025, respectively, compared to the same periods in 2024. The decreases in net operating lease revenue were driven by lower remarketing performance and lower asset balances. We recognized net remarketing losses of $19 million for the six months ended June 30, 2025, compared to net remarketing gains of $59 million and $105 million for the three months and six months ended June 30, 2024, respectively. The decreases in remarketing gains for the three months and six months ended June 30, 2025, were primarily driven by lower auction prices on the sale of specific vehicle models and lower termination volume. Refer to the Operating Lease Residual Risk Management section of this MD&A for further discussion.

Previous wording

The provision for credit losses decreased $14 million for the three months ended March 31, 2025, compared to the three months ended March 31, 2024. The decrease in provision for credit losses for the three months ended March 31, 2025, was primarily driven by lower net charge-offs in our consumer automotive portfolio as compared to the same period in 2024, partially offset by increased specific reserve activity in our commercial automotive portfolio. Refer to the Risk Management section of this MD&A for further discussion on our provision for credit losses.

Current wording

The provision for credit losses increased $4 million and decreased $10 million for the three months and six months ended June 30, 2025, respectively, compared to the three months and six months ended June 30, 2024. The increase in provision for credit losses for the three months ended June 30, 2025, was primarily driven by asset growth within our consumer automotive portfolio, partially offset by lower net charge-offs in our consumer automotive portfolio. The decrease in provision for credit losses for the six months ended June 30, 2025, was primarily driven by lower net charge-offs in our consumer automotive portfolio. Refer to the Risk Management section of this MD&A for further discussion on our provision for credit losses.

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 9.20% and 9.06% for the three months ended March 31, 2025, and 2024, respectively.

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 9.26% and 9.23% for the three months and six months ended June 30, 2025, respectively, and 9.19% and 9.13% for the three months and six months ended June 30, 2024.

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 6.50% and 7.69% for the three months ended March 31, 2025, and 2024, respectively.

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 6.41% and 6.45% for the three months and six months ended June 30, 2025, respectively, and 7.64% and 7.67% for the three months and six months ended June 30, 2024.

Previous 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.

Current wording

(f)Yield includes net losses on the sale of off-lease vehicles of $19 million for the six months ended June 30, 2025, and net gains of $59 million and $105 million for the three months and six months ended June 30, 2024, respectively. Excluding these losses and gains on sale, the yield was 6.86% and 6.76% for the three months and six months ended June 30, 2025, respectively, compared to 5.66% and 5.52% for the three months and six months ended June 30, 2024.

Previous 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.

Current wording

During the three months and six months ended June 30, 2025, our portfolio yield for consumer automotive loans, excluding the impact of hedging activities, increased 34 and 41 basis points, respectively, as compared to the same periods in 2024. The increases for the three months and six months ended June 30, 2025, were 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 9 basis points higher than our portfolio yield for consumer automotive loans excluding the effects of derivative financial instruments designated as hedges for both the three months and six months ended June 30, 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

During the three months ended March 31, 2025, our portfolio yield for commercial wholesale floorplan loans, excluding the impact of hedging activities, decreased 104 basis points, compared to the same period in 2024. The decrease was primarily due to lower benchmark interest rates. Additionally, our portfolio yield for other commercial automotive loans increased 5 basis points during the three months ended March 31, 2025, compared to the same period in 2024. The increase was primarily driven by the portfolio turning over and benefiting from higher yielding dealer loan originations.

Current wording

During the three months and six months ended June 30, 2025, our portfolio yield for commercial wholesale floorplan loans, excluding the impact of hedging activities, decreased 106 basis points compared to both the same periods in 2024. The decreases were primarily due to lower benchmark interest rates, as our commercial automotive loans are generally variable-rate. Additionally, our portfolio yield for other commercial automotive loans decreased 3 basis points and increased 1 basis point during the three months and six months ended June 30, 2025, respectively, compared to the same periods in 2024. The decrease for the three months ended June 30, 2025, was primarily driven by lower dealer term loans. The increase for the six months ended June 30, 2025, was driven by the portfolio turning over and benefiting from higher yielding dealer loan originations.

Previous wording

Our portfolio yield for investment in operating leases, net, including gains and losses on the sale of off-lease vehicles, decreased 177 basis points to 5.69% for the three months ended March 31, 2025, as compared to 7.46% for the three months ended March 31, 2024. The decrease was due to net remarketing losses of $19 million for the three months ended March 31, 2025, compared to net remarketing gains of $46 million for the same period in 2024, primarily driven by approximately $20 million of losses on the sale of two specific ICE vehicle models. Refer to the Operating Lease Residual Risk Management section of this MD&A for further discussion.

Current wording

Our portfolio yield for investment in operating leases, net, including gains and losses on the sale of off-lease vehicles, decreased 161 and 167 basis points to 6.88% and 6.29% for the three months and six months ended June 30, 2025, respectively, as compared to 8.49% and 7.96% for the three months and six months ended June 30, 2024. The decreases were due to lower remarketing gains, which decreased $59 million and $124 million for the three months and six months ended June 30, 2025, compared to the same periods in 2024. Refer to the Operating Lease Residual Risk Management section of this MD&A for further discussion.

Previous 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.

Current wording

Retail loan originations with a term of 76 months or more represented 23% of total retail loan originations for both the three months and six months ended June 30, 2025, compared to 24% and 23% for the three months and six months ended June 30, 2024. Substantially all the loans originated with a term of 76 months or more during both the three months and six months ended June 30, 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

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

Current wording

(a)Includes CSG originations of $915 million and $1.0 billion for the three months ended June 30, 2025, and 2024, respectively.

Previous wording

Total consumer automotive loan and operating lease originations increased $397 million for the three months ended March 31, 2025, compared to the same period in 2024. The increase was primarily driven by strong industry new vehicle sales and continued momentum in electric vehicle lease contracts.

Current wording

Total consumer automotive loan and operating lease originations increased $1.2 billion and $1.6 billion for the three months and six months ended June 30, 2025, respectively, compared to the same periods in 2024. The increases were primarily driven by strong industry new vehicle sales and continued momentum in electric vehicle lease contracts.

Previous 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.

Current 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.

Previous 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.

Current wording

Originations with a FICO® Score of less than 620 (considered nonprime) represented 9% and 8% of total consumer loan and operating lease originations for the three months and six months ended June 30, 2025, respectively, compared to 7% and 8% for the three months and six months ended June 30, 2024. Consumer loans and operating leases with FICO® Scores of less than 540 represented 1% of total originations for each of the three months and six months ended June 30, 2025, and 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 $8.2 billion at both June 30, 2025, and December 31, 2024, or approximately 9.7% of our total consumer automotive loans at both June 30, 2025, and December 31, 2024. 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 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.

Current wording

During the second 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 9.1% and 8.6% of our total consumer automotive finance receivables and loans as of June 30, 2025, and December 31, 2024, respectively. Loan purchases from Carvana were 11% and 9% of our total consumer automotive financing originations during the three months and six months ended June 30, 2025, respectively, as compared to 5% and 7% for the same periods in 2024.

Previous 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.

Current wording

Average commercial wholesale financing receivables outstanding decreased $3.4 billion and $2.5 billion during the three months and six months ended June 30, 2025, respectively, as compared to the same periods in 2024. The decreases for the three months and six months ended June 30, 2025, as compared to the same periods in 2024, were 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 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.

Current wording

Carvana's commercial line of credit totals $1.5 billion, with a scheduled maturity in the second quarter of 2027. 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 June 30, 2025, Carvana’s gross wholesale floorplan assets outstanding balance was $72 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 was $6.3 billion for both the three months ended March 31, 2025, and 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 decreased $128 million and $64 million for the three months and six months ended June 30, 2025, respectively, compared to the same periods in 2024, to an average of $6.3 billion for the both three months and six months ended June 30, 2025.

Previous wording

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

Current wording

(a)Includes interest expense of $15 million and $29 million for the three months and six months ended June 30, 2025, respectively, and $14 million and $27 million for the three months and six months ended June 30, 2024.

Previous 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.

Current wording

(b)Includes net unrealized gains on equity securities of $30 million and $15 million for the three months and six months ended June 30, 2025, respectively, and net unrealized losses of $28 million and $11 million for the three months and six months ended June 30, 2024.

Previous 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.

Current wording

Our Insurance operations earned income from continuing operations before income tax expense of $28 million and $30 million for the three months and six months ended June 30, 2025, respectively, compared to a loss of $40 million and income of $30 million for the three months and six months ended June 30, 2024. The increase for the three months ended June 30, 2025, was primarily driven by increases in net investment gains and insurance premiums and service revenue earned, partially offset by increases in insurance losses and loss adjustment expenses.

Previous 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.

Current wording

Other gain on investments, net was $59 million and $55 million for the three months and six months ended June 30, 2025, respectively, compared to loss on investments, net of $6 million and gain on investments, net of $29 million for the same periods in 2024. This consisted of realized capital gains of $29 million and $40 million during the three months and six months ended June 30, 2025, compared to $21 million and $39 million for the same periods in 2024. The increases for the three months and six months ended June 30, 2025, were driven by net unrealized gains on equity securities of $30 million and $15 million for the three months and six months ended June 30, 2025, compared to net unrealized losses on equity securities of $28 million and $11 million during the same periods 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 $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.

Current wording

Insurance losses and loss adjustment expenses totaled $203 million and $364 million for the three months and six months ended June 30, 2025, respectively, compared to $181 million and $293 million for the same periods in 2024. The increases for the three months and six months ended June 30, 2025, were primarily due to higher weather losses driven by growth in our vehicle inventory insurance business. During the three months and six months ended June 30, 2025, weather-related loss and loss adjustment expenses from our vehicle inventory insurance business were $91 million and $149 million, respectively, compared to $78 million and $95 million during the same periods in 2024. We utilized our excess of loss reinsurance and ceded weather-related losses on our vehicle inventory insurance business during the first and second quarters of 2024, and 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.