Good day, and thank you for standing by. Welcome to Ally Financial Fourth Quarter and Full Year 2023 Earnings Call. At this time, all participants are in a listen-only mode. After the presentation, there will be a question-and-answer session. Be advised that today's conference is being recorded. I would now like to turn the call over to Sean Leary, Head of Investor Relations. Please go ahead.

Thank you, Carmen. Good morning, and welcome to Ally Financial's fourth quarter and full year 2023 earnings call. This morning, our CEO, Jeff Brown, and our CFO, Russ Hutchinson, will review Ally's results before taking questions. Interim CEO, Doug Timmerman, has also joined today's call. The presentation we'll reference can be found on the Investor Relations section of our website, ally.com. Forward-looking statements and risk factor language governing today's call are on Slide 2. GAAP and non-GAAP measures pertaining to our operating performance and capital results are on Slides 3 and 4. As a reminder, non-GAAP or core metrics are supplemental to and not a substitute for U.S. GAAP measures. Definitions and reconciliations can be found in the appendix. And with that, I'll turn the call over to JB.

Thank you, Sean. Good morning, everyone. Before we get into the results, I want to introduce and welcome Doug Timmerman, who will take over as Interim CEO on February 1. Doug has spent more than 30 years in our auto finance and insurance businesses and is incredibly well positioned to lead Ally. His experience in the industry is unrivaled. He is well respected across all areas of the company, and he has the full support and confidence of our Board, our leadership team, our employee base and also our auto finance customer base. We're very fortunate to have a great leader in Doug and a deep bench across the company to ensure a seamless transition now and when we name our permanent CEO. Doug, congratulations and maybe you'd like to share a couple of comments.

Thank you, JB. It's a pleasure to be here this morning. I'm really excited for the opportunity to lead Ally and encouraged by the momentum we have across the business. I'm more optimistic than ever about the outlook for the company based on the strength of the auto and bank franchises. And I've got a tremendous amount of confidence our team will continue to execute and support our customers during this transition. Back to you, JB.

Thank you, Doug. Okay, let's get rolling on Page number 5. I made this point many times over the past nine years, but the culture we have developed at Ally is among my proudest achievements as CEO. To be clear though, it's not my culture or the CEO's culture, it's a culture that is empowered and nurtured by every one of our 11,000-plus teammates. I firmly believe a strong culture is essential to delivering for our customers, communities and shareholders and it all starts with our employees. To my teammates for the past 15 years, thank you for your hard work and dedication. Your commitment is the driving force behind our success. I'm grateful for your leadership, integrity and consistent execution against our long-term strategic objectives. The real benefit of an engaged workforce that embraces our lead core values is the customer obsession it creates. We've consistently rallied around initiatives that help us better serve our 11 million customers and drive industry change. An 88% customer satisfaction score across more than 380 million digital interactions is proof that when you do it right, customers notice and appreciate it. Culture can't be taken for granted and needs to be nurtured daily. To that end, we've consistently prioritized building our culture and creating a sense of belonging. We are not focused on winning awards, but we do take pride when others recognize what we do for our employees, including being identified as a top employer across multiple dimensions. Our teammates continue to invest in the communities in which we live and work. In 2023, Ally teammates donated over 60,000 hours of their time to support our communities. Our 50-50 media pledge has shed light on women's sports and we're encouraged to see this has really moved the needle in terms of visibility and investments by other brands. Our Moguls in the Making program has opened new doors and brought incredibly talented associates to Ally over the past five years. The energy of the event each year is infectious and gives me tremendous pride in what we can accomplish together. I truly believe culture is a differentiator and remains a key driver of Ally's success moving forward. And with that, let's turn to Page number 6 and get into the results. Full-year adjusted EPS of $3.05, core ROTCE of 11.5% and revenues of $8.2 billion reflected our ability to deliver solid financial results, while continuing to position for earnings growth over the years ahead. NIM of 3.35% was impacted by the rapid tightening we've seen over the past two years. With the tightening cycle likely behind us, we are well positioned for meaningful NIM expansion going forward. There were a few notable items in the quarter I wanted to touch on before diving into operational results. This morning, we announced that we've reached an agreement to sell Ally Lending. This transaction allows us to allocate capital to our highest-returning businesses and focus on strengthening relationships with our consumer and dealer customers. The operations were moved to held for sale and we recorded a goodwill impairment within the quarter. The fourth quarter impacts, which Russ will cover in more detail, are excluded from adjusted EPS. We expect the sale to close in the first quarter and generate 15 basis points of CET1 at closing and modestly increase tangible book value. The sale is also accretive to earnings going forward. Additionally, within the quarter, we deconsolidated $1.7 billion of retail auto loans from the balance sheet through securitization transactions, adding 9 basis points of CET1. From a cost perspective, the benefit of the headcount actions we announced in the third quarter and completed in the fourth quarter, are fully embedded in our expense run rate going forward. Fourth quarter results also include a $38 million FDIC special assessment being incurred across the industry. Our charge was among the lowest in the industry, reflecting the composition of our deposit base. The impact of the assessment is also excluded from adjusted EPS. Moving to full-year operational highlights. Within auto finance, consumer originations of $40 billion were sourced from a record 13.8 million applications, a testament to the scale of our business and mutually beneficial dealer relationships. The average originated yield of 10.7% increased nearly 250 basis points on a full-year basis, driven by robust application flow, disciplined pricing and underwriting. Importantly, nearly 40% of our full-year volume was in our highest quality credit tier, which will be a tailwind to the loss profile as those loans season. Full-year net charge-offs in retail auto were 177 basis points, in-line with the guidance we gave a year ago. We continue to see encouraging performance trends across vintages and flow to loss rates, which will cover when we get to credit shortly. Insurance earned premiums of $1.3 billion were the highest since our IPO. Now, turning to Ally Bank. 2023 was an outstanding year in terms of deposits performance. Despite the disruption stemming from the March banking events and the decline in deposit balances across much of the industry, we delivered solid deposit growth every quarter in 2023. We also saw record growth in customers and now serve more than 3 million customers with $142 billion of deposit balances. Ally Credit Card now serves more than 1.2 million active cardholders with $2 billion of balances. Despite elevated net charge-off activity in the near term, returns in the card business are compelling, which we'll cover in more detail shortly. And finally, corporate finance continues to generate steady loan growth and accretive returns. The business delivered record earnings and a 25% ROE in 2023 and the quality of the book remains strong. Let's turn to Slide number 7 to talk about Ally's market-leading franchises. Within Dealer Financial Services, 22,000 dealer relationships resulted in nearly 14 million consumer auto applications in 2023, a record for Ally. In terms of originations, that's more than $400 billion in consumer auto volume decisions, which allows us to be selective and optimize returns. Again, $1.3 billion of insurance earned premiums is the highest since our IPO, and we see a long runway ahead as we leverage synergies with our auto finance team. I mentioned the impressive scale and growth we've seen in the consumer bank on the previous slide, but we're equally pleased with the quality of our customer base. Ally Bank depositors are highly engaged with more than 1 million consumers leveraging core product features across deposits and investments. That engagement continues to drive customer retention that has stayed above 95% since we launched the bank in 2009. Both Dealer Financial Services and Ally Bank have a robust scale, but remain nimble and able to pivot in response to evolving market dynamics. That has served us well in this environment and gives me confidence in our ability to deliver earnings growth going forward. Turning to Slide number 8. Total revenue of $8.2 billion represents a 76% increase since 2014. Net financing revenue of $6.2 billion is up 80% through the strategic positioning of the auto finance business and the consistent growth in high-quality deposits. Other revenue is up more than 50% as we've grown fee-generating businesses like insurance, smart auction and our auto pass-through programs. At the bottom of the page, we highlight our revenue growth across insurance, corporate finance and credit card. Revenue from these businesses have nearly doubled over the last nine years, and we see opportunities for further growth going forward. On Slide number 9, you can clearly see we've driven substantially higher margin through transformation on both sides of the balance sheet. Despite facing pressure from the historic rise in short-term rates, NIM is up 80 basis points since 2014 and is more than 50 basis points higher than where we were just a few years ago. Looking ahead, we see our retail auto yield continuing to expand as we originate new loans at higher yields than our current portfolio. Disciplined growth and higher yielding corporate finance and credit card loans, coupled with a continued decline in lower yielding mortgage and securities, are also a tailwind to earning asset yields. Our asset yield momentum is unique in the industry and combined with our strong deposit franchise supports our confidence in our attractive NIM trajectory. On Slide number 10, we've again provided a snapshot of our funding stack and liquidity position. We're core funded with deposits making up 88% of our profile and have multiple efficient funding sources, including unsecured, secured and short-term vehicles like the FHLB. Total available liquidity is $63.5 billion, which is 5.5 times our uninsured deposit balances. Our conservative liquidity profile remains a key priority and source of strength for Ally. Deposits remain at the core of our funding position, and the performance we saw in 2023 against a very challenging market backdrop highlighted the unique strength of our consumer bank. Let's turn to Slide number 11. As we said many times before, we are committed to optimization across our businesses to generate capital, drive risk-adjusted returns and invest in our scaled franchises. We took several meaningful actions in the quarter that demonstrate our commitment. The pending sale of Ally Lending allows us to further prioritize our highest returning and scaled businesses that directly serve our auto and deposit customers. At closing, we expect the sale of Ally Lending to add 15 basis points to our CET1 ratio and modestly increase tangible book value. The transaction is also accretive to earnings going forward. During the quarter, we sold $1.7 billion of retail auto loans via the securitization market to free up capital that can be redeployed to further support our dealers and consumers. We sold seasoned loans that were originated in a lower yield environment at breakeven economics demonstrating market appetite for our loans. We will continue to look opportunistically at ways to sell loans to create capital and better serve our dealers and consumers. In addition, we will continue to progress initiatives that we started over the past 12-plus months to generate capital and optimize returns. We meaningfully curtailed our origination appetite with a focus on eliminating underperforming segments, particularly within auto and card. The headcount actions we took in 3Q and completed during the fourth quarter have reduced the cost base of the company. We'll see the full $80 million benefit in 2024. Tax actions in 2023 also added $100 million of capital. We've not reinvested in the securities portfolio and have put minimal mortgage volume on the balance sheet since 2022. In this quarter, we moved $4 billion of non-agency MBS from AFS to HTM, reducing OCI volatility. The securities are a subset of our investment portfolio, but do not qualify as contingent liquidity. With changes to the regulatory framework on the horizon and the compelling origination opportunities we have within auto finance, you should expect capital optimization efforts will remain a top priority for us moving forward. And with that, I'll turn it over to Russ to cover detailed financial results.

Thank you, JB. Good morning, everyone. I'll begin on Slide 12. Net financing revenue excluding OID of $1.5 billion was down year-over-year, driven by higher funding costs given elevated short-term rates. Strength in fixed asset pricing was a partial offset during the quarter and positions us for NIM expansion through 2024 and beyond. Adjusted revenue of $500 million was up year-over-year and quarter-over-quarter, reflecting continued momentum across our diversified product offerings and solid investment gains. We're now at the quarterly run rate we've previously guided to and expect continued expansion over time. Several years of strong conquest volume and normalization of dealer inventories create a nice tailwind for insurance revenue. And we continue to see growth in both smart auction and the consumer auto pass-through programs, which enable us to better monetize application flow. Provision expense of $587 million reflected solid credit performance in retail auto with losses on the low end of our guidance and elevated losses in card as we highlighted at an investor conference last quarter. Provision expense also included a $16 million benefit as we moved the Ally Lending assets to held for sale designation in anticipation of a 1Q sale. This benefit has been excluded from adjusted metrics, including earnings per share. Noninterest expense of $1.4 billion includes two significant one-time items. First, a $149 million write-down of goodwill associated with the Ally Lending sale that brings the Ally Lending related one-time items to $133 million in total netting out the provision benefit. And second, we incurred a $38 million charge from the FDIC special assessment associated with the 2023 banking crisis. Both items have been excluded from adjusted metrics, including adjusted earnings per share. Excluding these one-time items, expenses were up around 1.5% on a year-over-year basis, right in the middle of the range we provided in December. Our effective tax rate during the quarter was negative 20% on a GAAP basis. Excluding the impact of lending, the tax rate was around 10%, which was better than expected as we saw strong EV volume during the quarter. GAAP and adjusted EPS for the quarter were $0.16 and $0.45, respectively. Moving to Slide 13, net interest margin, excluding OID, of 3.2% decreased 6 basis points quarter-over-quarter, in-line with the expectations and resulting in a full-year NIM of 3.35%. Earning assets were down on a linked-quarter basis, driven mainly by the sale of $1.7 billion of retail auto loans within the quarter. Margin has been pressured as we progressed through the tightening cycle given the liability-sensitive nature of our balance sheet. But we have performed well in terms of pricing on both sides of the balance sheet. Retail auto pricing has achieved a 95% pricing beta and has exceeded expectations. Strong pricing has moved retail portfolio yields up 100 basis points in the past year. As we've talked about before, we see that yield expanding as origination yields are well above 10%. Looking forward, we expect earning assets to be generally flat, but with favorable mix dynamics as lower yielding mortgage and securities are running off and being replaced by higher returning retail auto, corporate finance and credit card assets. So, on the asset side, both mix and natural portfolio turnover within retail auto will be tailwinds in 2024 and beyond. Turning to liabilities. Cost of funds moved up within the quarter, in-line with expectations. Since tightening began, we've seen a cumulative deposit beta of around 70%, which compares well to peers, particularly in the context of $4.6 billion of Ally retail deposit growth and record customer growth in the year where industry balances contracted. We remain confident in our path to 4% NIM. We have assumed the Fed is done tightening, but we are not dependent on Fed cuts. Rate cuts will impact the pace of NIM expansion, but not the destination. The pace of rate cuts implied by the current forward curve would accelerate our path to 4% NIM towards the middle of next year. Turning to Page 14, CET1 of 9.4% increased quarter-over-quarter. As we mentioned before, the sale of lending will add another 15 basis points upon closing in March. Given we have another CECL phase-in, we expect a relatively flat CET1 ratio in the first quarter as the Ally Lending sale benefit will be offset by CECL phase-in. Our TCE to TA ratio increased by more than 50 basis points within the quarter, driven by an increase in OCI as benchmark rates declined. We recently announced our quarterly dividend of $0.30, which remains flat to the prior quarter. As JB laid out, capital actions we undertook during the quarter and actions that we continue to execute upon reflect our commitment to generating capital, strategically investing in our highest returning businesses and driving long-term value for shareholders. Tangible book value per share is up 100% since our IPO, excluding the impacts of AOCI, which we expect to accrete to par over time. Let's turn to Slide 15 to review asset quality trends. Consolidated net charge-offs of 177 basis points reflected seasonal trends and elevated activity within corporate finance and credit card. Retail auto net charge-offs of 221 basis points in the fourth quarter were at the low end of the guidance we provided on our third quarter earnings call. In commercial auto, we recognized charge-offs of $19 million, which were previously reserved for resulting in minimal P&L impact within the quarter. In the bottom right, 30 and 60 day retail auto delinquencies reflect seasonal increases. Importantly, the year-over-year increase in 30-day delinquency rates declined for the fourth consecutive quarter. Moving to Slide 16, consolidated coverage decreased 16 basis points to 2.57%. The decrease within the quarter was mainly driven by mix dynamics, including the pending sale of Ally Lending, which carried a coverage rate of 9% and growth within commercial auto, which has a lower coverage rate given its low loss content. The decline in coverage rate was also impacted by the recognition of losses on credits within corporate finance and commercial auto, for which we previously had specific reserves that do not need to be replenished. The total loan loss reserve of $3.6 billion declined approximately $250 million, driven mainly by the movement of Ally Lending assets to held for sale and the retail auto loan sales. Retail auto coverage of 3.65% increased 3 basis points, entirely driven by loan sales executed within the quarter, which was comprised of seasoned loans with lower loss content. As a reminder, for our CECL reserving process, we leverage a 12-month macroeconomic forecast, which has unemployment increasing to 4.4% this year. Longer term, we assume unemployment increases to approximately 6% under our reversion to mean methodology. Let's turn to Slide 17 to discuss retail auto credit in more detail. On a full-year basis, charge-offs of 1.77% were in-line with the guidance we provided a year ago. And within the fourth quarter, net charge-offs of 2.21% were on the low end of our most recent guide. Within the quarter, improving front book performance coupled with stable flow to loss rates was more than enough to offset softness in used values, which ended the quarter around 5% lower than we assumed when providing 4Q guidance. Looking at delinquency trends, the year-over-year rate of change declined again for the fourth consecutive quarter with 30-plus up 86 basis points year-over-year, 82 basis points excluding the impact of loan sales. We've been active in optimizing the buybacks to remove underperforming segments and maximize through-the-cycle adjusted returns. Our curtailment actions began in mid-2022 and the cumulative impact of those actions has been significant in terms of volume, but even more so in terms of loss content removed from our origination profile. We continue to be encouraged by granular performance monitoring with all origination vintages showing improved performance as they season. In terms of specific cohorts, the most seasoned parts of the portfolio from 2021 and earlier continue to outperform price loss expectations and have passed their peak loss period. The 2022 vintage, more specifically the second half of 2022, is showing elevated loss content versus expectations, but again, the vintage has consistently shown improving performance over time. It's early to evaluate the 2023 vintage, but we are encouraged by initial performance indicators, and our shift up the credit spectrum in April of 2023 has meaningfully reduced the absolute loss content on our most recent vintages. The 2023 vintage has started to outperform 2022 in terms of delinquency after 12 months on book, and we expect that outperformance to expand as we move forward given the underwriting changes we've made over time and the shift into super prime in April. It's important to remember the first six months of any vintage is noisy, and we really start to get a good look closer to 12 months. On the page, we've shown more detail comparing months seven to 12 of the 2022 and 2023 vintages. And as you can see, the 2023 vintage curve has started to bend favorably, and we expect that to continue over time. We know delinquency trends by vintage are a focal area, but we also look at the same trends on an actual loss basis. And on that basis, the 2023 vintage looks even better relative to 2022. As you all know, we've actively refined our approach to collections over time, including extension of repo timing. In total, that's resulted in more churn in the delinquency buckets, but a meaningful improvement in eventual losses. So, delinquency trends are encouraging and loss performance is even more encouraging. As we sit here today, we feel our underperforming originations are ring-fenced to the second half of 2022. With yields over 9% for that cohort, these are still financially attractive loans. With that vintage entering its peak loss period now, it will be the primary driver of NCO performance in the first half of 2024, which will also see increasing unemployment based on consensus economic estimates. Later in the year, we expect the 2023 vintage will start to drive losses down on a seasonally adjusted basis. We'll talk more about the overall guide later, but putting the retail credit performance together, we expect losses to increase in 2024, but are confident our annual NCO rate will remain below 2%. On a seasonally adjusted basis, we'd expect higher losses in the first half of the year and then improving performance as new originations reach peak losses. On Slide 18, we provide an outlook for used vehicle values, which declined 9% in 2023 and have declined 26% from their 2021 peak. We are assuming another 5% decline in 2024 with much of that decline occurring in the first half of the year. That would result in a total decline from peak levels of just over 30%. We continue to expect used values will stabilize and ultimately settle around 20% higher than pre-pandemic levels. With new vehicle production below pre-pandemic levels for nearly four years, used supply will remain 15% below historical norms over the next several years and provide structural support for used values. Turning to Slide 19. We help our dealers sell as many cars and trucks as possible. As we have said before, we encourage our dealers to send us all of their application volume. We leverage our differentiated go-to-market approach coupling high-tech and high touch to earn their partnership. We decisioned over $400 billion of potential loan volume in 2023. Record application flow enabled us to be dynamic in what we originate. Our ability to pivot up or down the credit spectrum gives us confidence in our ability to continue to book strong risk-adjusted yields. Our pass-through programs allow us to better serve our dealers while providing a mechanism to monetize a greater share of our application volume. Turning to origination trends on the bottom half of the page, fourth quarter volume of $9.6 billion resulted in $40 billion of consumer originations for the year across a diverse set of dealer partners. Used comprised 65% of originations, while the percentage of non-prime originations remained at 9%. The unique scale of our auto franchise and the depth of our relationships with our dealers give us a durable competitive advantage that enables us to be selective and dynamic in what we originate. Let's turn to Slide 20 to review auto segment highlights. Pre-tax income of $294 million was lower year-over-year, driven by higher provisions and noninterest expense. Provision reflected typical seasonality, while expenses were the result of elevated repo costs across the industry and requisite spending to support the strength and scale we just highlighted. Looking at the bottom left, originated yield of 10.8% was up 124 basis points from the prior year, reflecting significant pricing power throughout 2023. Importantly, 43% of our retail volume was in our S tier, which represents the highest concentration within that tier in more than a decade. The total portfolio yield increased 8 basis points within the quarter, including a lower contribution from the hedge portfolio. Excluding hedge, the natural portfolio yield increased 27 basis points this quarter, reflecting the repricing momentum that will continue going forward. The bottom right shows lease portfolio trends. Gains declined quarter-over-quarter, driven by a decline in used values and lower termination volumes, partially offset by a reduction in dealer and lessee buyouts. Turning to insurance results on Slide 21. Core pre-tax income of $62 million included the highest premium earned since our IPO and solid investment gains. Total written premiums of $333 million increased 17% as we remain focused on increasing dealer relationships and benefit from normalizing inventory levels. Insurance losses of $93 million were up $30 million year-over-year, driven by portfolio growth, increased GAAP losses and the cumulative impact of inflation. We have provided additional detail on loss performance given the normalization of our GAAP losses over the past year and the increase in our non-weather P&C losses. Non-weather P&C includes losses from our garage insurance product and inventory theft, which have increased over the past year. We've been very active in terms of loss prevention and pricing for increasing loss activity and are confident in the growth opportunities ahead for insurance. Moving to Ally Bank on Slide 22. Retail deposits of $142 billion increased $4.6 billion year-over-year and $2.2 billion quarter-over-quarter, demonstrating the scale and resiliency of our franchise. We grew our customer base for the 15th consecutive year, and net customer growth of 359,000 for 2023 is the highest in Ally Bank's history. We now serve as a relentless ally for more than 3 million customers. We also continue to see growth in multi-product customers and maintain our industry-leading customer retention rate of over 95%. Turning to Slide 23, Ally Credit Card provides a direct-to-consumer digital product offering with a compelling return profile. From an ALM perspective, card provides a floating rate asset with an attractive margin and further diversification to our liability-sensitive balance sheet. From a customer perspective, the existing near-prime product fits well with the meaningful portion of our auto and insurance customers, and we're actively developing a product set that would meet the needs of our deposit customers. In addition to delivering a great customer experience, we remain focused on credit management and measured prudent growth within the card business. Losses in the portfolio have increased in recent quarters and are expected to peak in mid-2024. The dynamics in our portfolio mirror what has been observed across the industry, specifically weaker performance in the 2021 and 2022 near-prime cohorts, which have been the most impacted by inflation. For Ally, those cohorts represent a majority of the total portfolio, resulting in a more pronounced increase in portfolio-level loss rates. Beginning in 2022, we took significant credit tightening actions on both new and existing accounts. We reduced exposure in higher risk segments by over $300 million in 2023 because of our tightening actions, including a 20% reduction in new accounts coupled with reductions in credit lines. Heading into 2024, we expect these tightening actions on new and existing accounts to curtail more than $500 million of exposure. In terms of overall portfolio performance, the return profile in card is compelling even in this period of elevated losses. Gross revenue yield, including fees of 27%, provides significant return resilience to absorb loss volatility. Assuming losses increased to 13%, we still see risk-adjusted margins of 10% and a pre-tax ROA of approximately 2%. Assuming normalized losses of 9%, we expect a mid-teens risk-adjusted margin, in-line with expectations when we entered the business in 2021, driving a pre-tax ROA of 5% and enhancing the overall return profile of our largely secured balance sheet. Those economics reflect Ally's consolidated cost of funds and include all operating costs, excluding expenses from the 2021 acquisition of Fair Square and allocation of corporate overhead. While we have moderated our growth ambitions in the near term, we continue to view card as a key part of our long-term strategy and financial profile. Let's move to Slide 24 and talk about two other products offered within the consumer bank, Ally Home and Ally Invest. Mortgage is the largest purchase consumers make, and Ally Home is a leading digital experience we offer to further deepen the relationship with our customers. Our operating model centers on a variable cost structure, enabling us to limit earnings volatility in periods where origination volumes are depressed. Most of the volume in Ally Home comes from deposit customers, and less than 20% of loans originated are retained on balance sheet. Ally Invest is a key aspect of the overall deposit value proposition, providing customers seamless money movement between brokerage and savings. In total, Ally Invest customers maintained $13 billion in traditional deposits with Ally and maintain an average balance that is double that of non-invest deposit customers. Ally Invest is profitable on a standalone basis and offers another compelling experience to drive engagement and retention. Mortgage results are on Slide 25. Mortgage generated pre-tax income of $24 million and $224 million of direct-to-consumer originations, reflective of the operating environment. Operating expenses declined nearly 20% on a year-over-year basis, reflecting the benefits of our partner model. We remain focused on a great customer experience for customers rather than a specific origination target. Turning to corporate finance on Slide 26. Full-year 2023 pre-tax income of $307 million is the highest since our IPO. Our team is made up of industry experts with a long history in the business. Over the past five years, ROEs have been 24% on average, including 25% in 2023. Our $11 billion HFI portfolio is up 7% year-over-year, reflecting disciplined growth. On the bottom left, we highlight net charge-off history. Charge-offs in this business are driven by specific exposures and therefore inherently choppy. Across the total portfolio, our average annual NCO rate was 30 basis points since 2014. Excluding healthcare cash flow loans, the NCO rate was 7 basis points. When performance began to deteriorate in 2020, we promptly ceased healthcare cash flow originations. This portfolio is in runoff and accounts for less than 1.5% of loan balances. We feel good about our corporate finance portfolio entering 2024. Criticized assets make up 10% of the portfolio, which is less than half of the historical run rate. Non-accrual loans are at all-time low of 1%, and our reserve is nearly 1.6 times our non-accrual loan balances. We provided a little more context than usual given the macro concerns around C&I and some of the recent net charge-off activity within healthcare cash flow. Corporate finance is a great business for Ally with a long track record of delivering through many economic cycles. Before closing, I'll share a few thoughts regarding the coming year. Slide 27 contains our financial outlook for 2024. As you know, the operating environment remains dynamic. We've talked regularly about the tailwinds that will drive our net interest margin, and our outlook remains consistent. We expect expansion in 2024 and see an exit rate around 3.4% to 3.5%, which puts the full-year average just under 3.3%. In terms of updates to our outlook from previous calls, our recent capital actions are good for profitability and capital generation, but also impact our starting point for NIM expansion. The sale of Ally Lending has impacted our near-term NIM outlook by around 3 to 4 basis points. When combined with curtailments in the card business, our NIM outlook for 2024 now incorporates 5 basis points of near-term impacts given the gross margin on those products. The impact of these actions on NIM is more than offset by lower credit costs and lower expenses. In addition to lending and card impacts, we also have higher securities balances in the near term based on the OCI rally, which could be a modest headwind to NIM if it sticks. We continue to be confident in our NIM expansion for 2024 and see an exit rate between 3.4% and 3.5%. However, these factors caused our starting point for NIM expansion to tick down. We have assumed the Fed is done tightening, but we are not dependent on Fed cuts. Given the 4Q rally in rates, we took the opportunity to add to our pay-fixed hedge exposure, which protects margins should cuts not materialize in March as the forward curve is suggesting. We do not expect a meaningful impact on our 2024 NIM whether or not the Fed commences cuts in March. The pace of Fed cuts implied by the current forward curve would, however, accelerate our path to 4% NIM towards the middle of next year versus the very end of next year in a more flat rate scenario. We have continued to position the balance sheet in such a way that near-term NIM expansion does not require lower rates. Turning to other revenue, we expect 5% to 10% of growth in 2024, driven by continued momentum in insurance, smart auction and the auto pass-through program. Asset levels are expected to remain relatively flat year-over-year, but with a favorable mix benefit of higher yielding loans replacing securities and mortgage. In terms of credit, we see retail auto net charge-offs increasing versus 2023 as our underperforming vintages make their way through peak loss in the first half of the year. But as I said, we're confident retail auto losses will remain below 2% for the year. Total charge-offs for the company of 1.4% to 1.5% reflect the increase in retail auto and credit card losses, partially offset by the sale of Ally Lending. We remain committed to cost discipline and have updated our prior expense guide to reflect the sale of Ally Lending. In total, we see expense growth of less than 1%, and we now expect controllable expenses to decline by more than 1%. We've taken another meaningful cut of expenses to reflect the sale of Ally Lending. We are currently estimating full-year tax rate of 18%. However, we continue to realize benefits from EV tax credits and broader tax planning strategies that will likely result in quarterly fluctuations like in 2023. So, a lot of moving pieces within the P&L, particularly around the sale of Ally Lending, but not a real change in our outlook. With the tightening cycle potentially behind us, we are confident the company is set up for meaningful earnings expansion over the next several years. We see a clear path to 4% net interest margin and a mid-teens ROE over the medium term. The exact timing will be driven by several factors, including rates and consumer health. We acknowledge continued uncertainties heading into 2024; however, we remain confident in our ability to continue to execute against the controllables and drive long-term shareholder value. And with that, I'll turn it back to JB.

Thank you, Russ. The strategic priorities we've established guide everything we do and are unwavering and will remain essential for Ally's long-term success for years to come. First and foremost, we've worked to ensure strong alignment between our culture and all our stakeholders. We built differentiated offerings across our businesses for both consumer and commercial customers and seek to find ways to highlight our unique position in the market. We'll continue finding ways to disrupt the industry and remove friction for customers by delivering leading digital experiences. This morning's call highlighted some of our recent actions, which make it apparent that our disciplined approach to risk management and capital allocation is only heightened in this dynamic operating environment. We've executed a remarkable transformation, and I'm confident in the team's ability to leverage these priorities going forward, allowing Ally to thrive for many years to come. As this is my final time with you, I want to thank you all for your support. I'm very proud of the long-term progress, and sometimes that gets lost in the quarter-to-quarter progressions. But wrapping up the year and looking back to when I went into this role, it is really amazing how far Ally has come. It was just 15 years ago this company was on the brink of extinction to today, a thriving and well-respected company and brand that is uniquely positioned to financially benefit as rates begin to normalize. It has been a true honor to serve as CEO. And now as I transition to a substantial customer with Hendrick Automotive, I will continue to be vested in the long-term success of Ally. Thank you all so much. And with that, Sean, back over to you for Q&A.

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

Thank you. One moment for our first question please. And it comes from the line of Ryan Nash with Goldman Sachs. Please proceed.

Hey, good morning, everyone. JB, just want to say that it's been a pleasure working with you, and best of luck at Hendrick.

Thanks so much, Ryan. Appreciate that.

Maybe one strategic question for, I guess, for each of you. JB or Russ, maybe just talk about the decision to sell Ally Lending. Was this part of a broader review? And are there any further changes? And then, Doug, congrats on being named Interim CEO. Any changes we should expect to you whether on the auto strategy or the broader company strategy? And I have a follow-up.

Great. Ryan, I'll start with the decision regarding Ally Lending. Reflecting on the events from March, it really compelled us to thoroughly evaluate all our operations and assess where we had scale and where we didn't. Synchrony has an excellent CEO in Brian Doubles. Brian and I exchanged ideas a few times during the second quarter, and we began discussing a potential opportunity for them. This is truly beneficial for both companies and is expected to be a highly accretive venture for Synchrony. Both Brian and his CFO are enthusiastic about it. They are handling the integration of many Ally team members effectively, which aligns perfectly with their platform. For us, this decision allows us to concentrate on our scaled operations at Ally and allocate capital accordingly. We anticipate finalizing the transaction in the first quarter of the upcoming year. Overall, we are confident about our current business landscape. This situation is exceptionally suited for Synchrony and Brian. The rest of the company remains stable. We are pleased with developments in credit card and commercial finance, and I want to clarify that this is a distinct matter. We are quite positive about it. That's the context for this situation, and Doug, feel free to share your thoughts as we head into this year.

Sure. Yeah. And I think the simple answer to your question, Ryan, is no, no change relative to our priorities, our focus, our business plans. Very confident that we've got the right priorities, and we have a very well thought-out plan and a plan myself and the rest of the leadership team have a lot of confidence in relative to our ability to meet or exceed expectations. So, I think we're very well situated there relative to your reference in the auto business. We pointed this out in the prepared remarks, but the competitive environment is certainly favorable. The success that we've had in driving application flow, no doubt, is a differentiator for us. And hopefully, you see that in the success that we've had in building our yields and improving the returns of the business and our ability to be nimble and selective relative to where we play, as well as our ability to originate at higher volume levels depending on capital related capacity there. So, a lot of reasons to feel good about the future as well as the plans that we've got in place today. So, hopefully, that answers your questions.

No, it does. And maybe just one follow-up. Russ, you gave a lot of color on credit. Maybe can you just expand on the comments regarding how you see credit improving throughout the year? And when we do get to the end of the year, where do you expect to be on a seasonally-adjusted basis? And should we expect that to become more the medium-term run rate for the company just given all the tightening that you've done and the move up into the S tier? Thank you.

Thanks, Ryan. That's a great question. I'm happy to provide some clarification. The net charge-off rate for retail auto in 2023 was right in line with our guidance from a year ago at 1.77%. As mentioned earlier, we're experiencing higher losses on vintages from the second half of 2023, which will continue to develop through the first half of 2024. We expect this to slightly increase our overall loss rate for 2024 compared to the 1.77% we reported for 2023. However, we are optimistic that our net charge-off rate will remain below 2% for the full year. On a seasonally adjusted basis, we'll start 2024 at an elevated level due to the second half of 2022. But as we transition into the latter part of the year, we anticipate seeing significant benefits from the curtailment actions we've implemented, and the vintages from 2023 will begin to positively influence our loss experience during that period, leading to improvement.

Thank you. And our next question, one moment please, comes from Sanjay Sakhrani with KBW. Please proceed.

Thank you. Good morning. And JB, good job as CEO of Ally and good luck.

Thank you, Sanjay. I appreciate that very much.

Could you discuss the progress of the net interest margin? It seems like you haven't fully factored in the assumptions from the forward curve, but if we take those as accurate, could you explain how the natural benefits to the net interest margin are unfolding as we adjust our approach? Additionally, what does the sensitivity of liabilities suggest for the upcoming year?

Yes, I'm happy to address that, Sanjay. As we mentioned during the call, if we consider the current forward curve, which suggests six cuts in 2023 and two additional cuts in 2025, the rate outlook is more favorable compared to a quarter ago. Based on this perspective, we anticipate reaching our 4% net interest margin around the middle of 2025. However, we also evaluate our business across various interest rate environments. If the forward curve does not unfold as predicted and we experience a flatter environment, it could push the timeline to reach 4% net interest margin towards the very end of 2025. We prefer not to rely on Federal Reserve rate cuts for our business operations, but we analyze a range of scenarios and outcomes. With the current rate curve, we expect to hit our target in the middle of 2025, while a more flat scenario would lead us to the end of 2025. Additionally, we took advantage of the rally last quarter to implement more pay-fixed hedges, providing us with some protection throughout 2024. Therefore, regardless of varying potential rate outcomes, our outlook for 2024 remains largely unchanged, and we maintain our exit rate target of 3.4% to 3.5%, even if we do not see the first Fed cut in March.

Okay. Great. That's very helpful. And I guess my follow-up question, I guess this is for you, JB, it might be a question for the Board, just where are we with timing of a final CEO? I think it's obviously taken a little bit longer than we thought. Doug, obviously, you sound very qualified. So, I'm just trying to get a sense of how we should think this plays out over the course of the next months or so.

I appreciate the question. The Board has been diligently working on this, and while the process isn't always straightforward, there has been a tremendous effort in interviewing candidates. What I value about our Board is their commitment; we are determined to find an exceptional operational and cultural leader who understands the nuances of banking. We've been disciplined in this regard. I expect that within the next quarter, we will be able to announce a permanent candidate. However, this process is still very dynamic. We are fortunate to have Doug in place, supported by a strong leadership team. Doug has the full backing of the Board and our customer base, and since he is well-known to our employees, he will transition smoothly. I am not concerned about continuity during this interim period. Over the next few months, you can anticipate a permanent candidate to be announced, but we will not compromise on finding the right leader to build on our existing foundation and advance the company.

Thank you. One moment for our next question, please. And it comes from the line of Jeff Adelson with Morgan Stanley. Please proceed.

Yes. Hi. Thanks for taking my questions. I guess I just wanted to circle back on the net interest margin commentary. As you kind of think about the potential benefit from the forward curve here, getting you to a 4% mark by mid-2025, just trying to understand what kind of assumptions you have in there for your deposit beta. And as we think through the first couple of quarters of 2024, do you think that you kind of reached as close to the peak as you can get on your deposit rate given that you kind of held that OSA rate steady? And let's say, the forward curve continues to price in more rate cuts, would you be looking to maybe add a little bit more in the way of hedges as you see opportunities and maybe that would defer the eventual benefit to getting to 4% if you do that?

Thank you, Jeff, for your question. Regarding deposit pricing, we've implemented another round of rate reductions on the CD side this morning, making it our second adjustment in 2024. We're already noticing some advantages from the interest rate environment. However, we anticipate that our deposit pricing won't change immediately, though it will adjust over time. If there are more rate cuts in 2024, those will eventually reflect in our deposit pricing, but with a delay. Currently, our deposit beta is around 70%, and we expect that to continue going forward. I hope I've addressed most of your questions, but please let me know if there's anything I've missed.

Just on the hedging, the opportunity to do more there?

Yeah, look, I think our sense is the Fed is done on tightening. We obviously are somewhat opportunistic in the market in terms of just kind of looking at what the outlook is. We took advantage of an opportunity in the fourth quarter where there was a real rate rally to take some of the variability off the table for us over the course of '24. It's hard for me to project kind of how the markets will behave kind of going forward. But look, certainly, if there are opportunities that make sense for us, we'll pursue those, but again, I'm not going to speculate on rates.

Thank you. And one moment for our next question, please. And it comes from the line of Rick Shane with JPMorgan. Please proceed.

Good morning, everybody, and thanks for taking my question. Jeff, I'm really glad I got on the line. It's been a pleasure covering your company, and I've really admired what I see as your commitment to the culture and ethos of Ally, and it really is a great legacy. So, congratulations and thank you so much.

Thank you, Rick. That means a lot to me. And one of the CEOs I greatly admire is at the top of your firm that always prioritizes people and does things the right way. So, it's been an absolute honor leading Ally and appreciate your consistent support as well, Rick. So, thank you.

Thank you. I wanted to talk a little bit about two trends in terms of auto. What we keep hearing is tightening of credit and raising of rates. The borrower quality is going up, but essentially affordability is going down. Russ, you showed us Slide 17 where you basically start to balance that out in terms of the impact on credit. But I am curious when you think about loss frequency given the decline in affordability, is this really ultimately going to be a net positive? One thing I would mention is that when I look at that slide, it doesn't contemplate the impact of the huge decline in gas prices during the sort of comparable windows. The '22 vintage sort of peaked or was seasoning as gas prices were going up sharply. The '23 is seasoning as gas prices are going down. So, I think when you sort of neutralize for that, I'm curious if you actually think frequency will improve.

It's a valid question. We closely monitor credit, analyzing vintages on a monthly basis and breaking them down further to assess our performance. The losses from the 2022 book are higher than usual, which is notable given the strong employment rates. We attribute this rise in losses to inflation and the challenges it poses for many of our borrowers. We are aware of this impact. Nonetheless, we keep a close eye on our credit, and we have made various adjustments in our servicing practices, particularly regarding the timing of repossession. We have discovered that delaying repossession leads to better outcomes. Allowing our collectors more time to manage their accounts and giving borrowers extra time tends to yield favorable results, which is reflected in our delinquency metrics and loss flow rates. Our flow to loss rates have remained favorable throughout this cycle. We analyze our vintages at a more detailed level than what is publicly accessible. Notably, the chart in the bottom middle of Page 17 shows that the 2023 vintage is diverging positively from the 2022 vintages. Our confidence in this trend continuing is bolstered by our in-depth monthly analysis. As mentioned earlier, the first six months of any vintage can be volatile as they mature, but our month-to-month evaluations indicate improvements from March through August. This trend reassures us about continued positivity in our metrics. We acknowledge that inflation is certainly a factor, but our detailed analysis suggests that the issues largely stemmed from the second half of 2022, and the 2023 vintages exhibit significant improvements both month-to-month and in our overall outlook for retail auto net credit losses.

Terrific. That's a very helpful answer. Thank you, guys.

Thanks, Rick.

Thank you. One moment for our next question please. All right. It comes from the line of John Hecht with Jefferies. Please go ahead, John.

Good morning, guys. Thank you for taking my questions, and good luck with everything, JB. Definitely enjoyed working with you.

My pleasure. Thank you.

Thank you. Regarding NIM this year, how should we view the yield side? You have clearly been successful in increasing new loan yields. How much additional potential is there in that area, considering rate stabilization and the shift in the macro mix?

Yeah, look, I mean, fourth quarter yield expanded again to 10.8%, giving us 10.69% over the course of the year, a great outcome. And remember, that's an outcome where we've ramped up our concentration in that S tier. And so, we've moved up credit at the same time that we've moved up pricing. We've shown overall a 95% beta on the way up in terms of rates that's really helped and supported us. Now, as we think about the outlook for auto, I would say, I think we've got a couple of natural advantages. Number one, we just see a tremendous amount of application volume and that gives us a lot of information and a lot of flexibility with our dealers in terms of how we have the ability to move up or down and how we have the ability to use pricing as a lever. That's a competitive advantage that I think is unique to Ally, just given the scale we have and the depth of our relationships with dealers. And it gives us a lot of confidence in our ability to optimize our yield and on a risk-adjusted basis in order to preserve our yield going forward. At this point, I don't think we expect our yield to continue to rise, but we do expect that we can basically use credit and pricing to maintain yield as we move through 2024.

Okay. Very helpful. Thanks. Sorry?

Maybe one to add on there is, though obviously new originations continue to come on higher than the overall portfolio yield, so you've got this nice natural tailwind that's going to show itself. So, you would expect the overall portfolio yield to continue increasing for the next several quarters.

Yes, that's right. When I talk about yield, I was really focused on the origination yield, maintaining near the level where it is today. But obviously, in the portfolio side, that is a natural tailwind. Also, on the portfolio side, we do have some benefit from, again, ongoing retail auto originations, credit card, corporate finance, at the same time that we see securities and mortgage with obviously lower yields rolling off.

Okay. Great. Very helpful. And then, follow-up question, Russ. You're peaking charge-offs from the '22 vintage first half of this year and then maybe some stabilization or favorable movements and losses as we move from there. How do we think about the AOL over the course? Is it stable or do you move it up a little bit through the peak charge-off cycle and then it starts to recede? How do we think about the trajectory there?

There are many factors that influence the AOL. We have a comprehensive process in place, and we take the macro environment into account, which includes a range of macro assumptions. As I noted earlier in the call, some of these assumptions incorporate a natural conservatism regarding our expectations for unemployment rates in the near term. Additionally, we include a mean reversion factor in our models, anticipating that unemployment will gradually return to around 6% over the medium term. There are many elements that contribute to the AOL, making it challenging to comment on its outlook, but we expect it to remain relatively stable.

Great. Thanks, John. That's all the time we have for today folks. If you have any additional questions, as always, please feel free to reach out to Investor Relations. Thank you for joining us this morning. That concludes today's call.

Thank you, everybody, and you may now disconnect.