Ally Financial Inc.

Previous wording

We face many risks and uncertainties, any one or more of which could have a material adverse effect on our business, results of operations, financial condition (including capital and liquidity), or prospects or the value of or return on an investment in Ally. We describe certain of these risks and uncertainties in this section, although we may be adversely affected by other risks or uncertainties that are not presently known to us, that we have failed to appreciate, or that we currently consider immaterial. These risk factors should be read in conjunction with the Regulation and Supervision section in Part I, Item 1 of this report, the MD&A in Part II, Item 7 of this report, and the Consolidated Financial Statements and notes thereto. This Annual Report on Form 10-K is qualified in its entirety by these risk factors.

Current wording

We face many risks and uncertainties, any one or more of which could have a material adverse effect on our business, results of operations, financial condition (including capital and liquidity), prospects or the value of our return on an investment in Ally. We describe certain of these risks and uncertainties in this section, although we may be adversely affected by other risks or uncertainties that are not presently known to us, that we have failed to identify, or that we currently consider insignificant. These risk factors should be read in conjunction with the Regulation and Supervision section in Part I, Item 1 of this report, the MD&A in Part II, Item 7 of this report, and the Consolidated Financial Statements and notes thereto. This Annual Report on Form 10-K is qualified in its entirety by these risk factors.

Previous wording

Below is a summary of the principal risk factors that could adversely affect our business, results of operations, financial condition (including capital and liquidity), or prospects or the value of or return on an investment in Ally.

Current wording

Below is a summary of the principal risk factors that could adversely affect our business, results of operations, financial condition (including capital and liquidity), prospects or the value of or return on an investment in Ally.

Previous wording

•Weak or deteriorating economic conditions, failures in underwriting, changes in underwriting standards, financial or systemic shocks, or continued growth in our nonprime or used vehicle financing business could increase our credit risk, which could adversely affect our business and financial results.

Current wording

•Weak or deteriorating economic conditions, failures in underwriting, changes in underwriting standards, failures in servicing loans and operating leases, financial or systemic shocks, or continued growth in our nonprime or used vehicle financing business could increase our credit risk, which could adversely affect our business and financial results.

Previous wording

•The market price of our common stock could be adversely impacted by anti-takeover provisions in our organizational documents and Delaware law that could delay or prevent a takeover attempt or change in control of Ally or by other banking, antitrust, or corporate laws that have or are perceived as having an anti-takeover effect.

Current wording

•The market price of our common stock could be adversely impacted by anti-takeover provisions in our organizational documents and Delaware law that could delay or prevent a takeover attempt or CIC of Ally or by other banking, antitrust, or corporate laws that have or are perceived as having an anti-takeover effect.

Previous wording

While the scope, intensity, and focus of governmental oversight can vary from time to time, we expect a highly demanding environment for the foreseeable future. In recent years, regulatory and other governmental agencies have taken a host of actions that create more challenging and volatile financial and operating conditions for financial-services companies, including through formal rulemakings that change the law or interpretations of the law, supervisory expectations and public statements that are designed to informally compel changes in industry practices, and more aggressive approaches to enforcement that are accompanied by increasingly severe penalties. These actions are comprehensive in their coverage, such as rulemakings on cybersecurity risk governance (including incident disclosure), climate-, diversity- and other sustainability related matters (including disclosures), CRA reform, and personal-financial-data rights as well as guidance and statements on mergers and acquisitions, regulatory capital, resolution planning, automotive financing and insurance, fees for financial services, and UDAAP. Further, the level of regulatory scrutiny may fluctuate over time based on numerous factors, including changes in the U.S. presidential administrations or one or both houses of Congress and public sentiment regarding financial institutions (which can be influenced by scandals and other incidents that involve participants in the industry). We are unable to predict the form or nature of any future changes to the laws, rules, regulations, or supervisory guidance and policies, including the interpretation, implementation, or enforcement thereof. Following the failures of three large banks in 2023, banking regulators have proposed changes, or indicated the potential for changes, regarding the regulation and supervision of banking organizations, in particular those, such as Ally, with $100 billion or more in assets. The introduction of new or more stringent regulatory requirements, as well as heightened supervisory expectations, could require Ally to maintain additional capital or liquidity or incur significant expenses. Governmental oversight of this kind may increase our operating costs or reduce our revenues, limit the types of financial services and products we may offer, alter the investments we may make, affect the manner in which we conduct our business and operations, increase our litigation and regulatory costs, and enhance the ability of others to offer more competitive financial services and products. We continue to devote substantial time and resources to risk management, compliance, regulatory-change management, and cybersecurity and other technology initiatives, each of which—whether successful or not—also may adversely affect our ability to operate profitably or to pursue advantageous business opportunities.

Current wording

While the scope, intensity, and focus of governmental oversight can vary from time to time, we expect a highly demanding environment for the foreseeable future. Regulatory and other governmental agencies have in the past taken, and in the future may continue to take actions that create more challenging and volatile financial and operating conditions for financial-services companies, including through formal rulemakings that change the law or interpretations of the law, supervisory expectations and public statements that are designed to informally compel changes in industry practices, and more aggressive approaches to enforcement that are accompanied by increasingly severe penalties. Further, the level of regulatory scrutiny may fluctuate over time based on numerous factors, including as a result of changes in governmental policies in response to adverse events impacting the financial services industry or from changes to public sentiment regarding financial institutions. We are unable to predict the form or nature of any future changes to the laws, rules, regulations, or supervisory guidance and policies, including the interpretation, implementation, or enforcement thereof. Changes in laws or the regulatory and supervisory environment could adversely affect us in substantial and unpredictable ways. The introduction of new or more stringent regulatory requirements, as well as heightened supervisory expectations, could require Ally to maintain additional capital or liquidity or incur significant expenses. In addition, changes in the regulatory environment or increased governmental oversight may increase our operating costs or reduce our revenues, limit the types of financial services and products we may offer, alter the investments we may make, affect the manner in which we conduct our business and operations, increase our litigation and regulatory costs, and enhance the ability of others to offer more competitive financial services and products. We continue to devote substantial time and resources to risk management, compliance, regulatory-change management, and cybersecurity and other technology initiatives, each of which—whether successful or not—also may adversely affect our ability to operate profitably or to pursue advantageous business opportunities.

Previous wording

Ally has elected to be treated as an FHC, which permits us to engage in a number of financial and related activities—including securities, advisory, insurance, and merchant-banking activities—beyond the business of banking. Ally and Ally Bank are subject to ongoing requirements for Ally to qualify as an FHC, including that Ally and all of its depository institution subsidiaries must be “well capitalized” and “well managed,” as defined under applicable law. If a BHC or any of its insured depository institutions is found not to be well capitalized or well managed, the BHC can be restricted from engaging in the broader range of financial and related activities permitted for FHCs, including the ability to acquire companies engaged in those activities, and can be required to discontinue these activities or even divest any of its insured depository institutions. In addition, if an insured-depository-institution subsidiary of a BHC fails to achieve a “satisfactory” or better rating in its most recent CRA performance evaluation, the ability of the BHC to expand its financial and related activities or make acquisitions could be restricted.

Current wording

Ally has elected to be treated as an FHC, which permits us to engage in a number of financial and related activities—including securities, advisory, insurance, and merchant-banking activities—beyond the business of banking. As a result, Ally and Ally Bank are subject to ongoing requirements for Ally to qualify as an FHC, including that Ally and all of its depository institution subsidiaries must be “well capitalized” and “well managed,” as defined under applicable law. If a BHC or any of its IDIs is found not to be well capitalized or well managed, the BHC can be restricted from engaging in the broader range of financial and related activities permitted for FHCs, including the ability to acquire companies engaged in those activities, and can be required to discontinue these activities or even divest any of its IDIs. In addition, if an IDI subsidiary of a BHC fails to achieve a “satisfactory” or better rating in its most recent CRA performance evaluation, the ability of the BHC to expand its financial and related activities or make acquisitions could be restricted.

Previous wording

In connection with their continuous supervision and examinations of us, the FRB, the UDFI, the CFPB, the SEC, FINRA, the NYDFS, or other regulatory agencies have in the past and in the future may continue to explicitly or implicitly require changes in our business or operations. Such a requirement may be judicially enforceable or impractical for us to contest, and if we are unable to comply with the requirement in a timely and effective manner, we have in the past and in the future may become subject to formal or informal enforcement and other supervisory actions, including memoranda of understanding, written agreements, cease-and-desist orders, and prompt-corrective-action or safety-and-soundness directives. In addition, compliance failures or other violations raised in connection with supervisory evaluations have in the past and in the future may continue to result in additional requirements for us to take certain remedial actions, including changes to our controls, operations or other processes. Compliance with such remedial actions may be costly and time consuming, and failure to comply in a timely manner that is sufficient from the perspective of the applicable regulatory agency could subject us to further remedial steps or enforcement actions. The financial-services industry continues to face increased scrutiny from supervisory authorities in the examination process, including through an increasing use of horizontal reviews from a broader industry perspective as well as strict enforcement of laws at federal, state, and local levels—particularly in connection with business and other practices that may harm or appear to harm consumers and compliance with anti-money-laundering, sanctions, and related laws. In addition, violations by other financial institutions relating to a particular business activity or practice may result in increased scrutiny, or increased penalties in connection with a related enforcement action, for similar activities. Because of the regulatory and supervisory framework, financial institutions often are less inclined to litigate with governmental authorities. In general, the amounts paid by financial institutions in settling proceedings or investigations and the severity of other terms of regulatory settlements are likely to remain elevated. In some cases, governmental authorities have required criminal pleas or other extraordinary terms, including admissions of wrongdoing and the imposition of monitors, as part of settlements. Supervisory actions could entail significant restrictions on our existing business, our ability to develop new business or make acquisitions, our flexibility in conducting operations, and our ability to pay dividends or utilize capital. Enforcement and other supervisory actions also can result in the imposition of civil monetary penalties or injunctions, related litigation by private plaintiffs, damage to our reputation, and a loss of customer or investor confidence, and a prior enforcement actio…

Excerpt shortened here; the source contains the full paragraph.

Current wording

In connection with their continuous supervision and examinations of us, the FRB, the UDFI, the CFPB, the SEC, FINRA, the NYDFS, or other regulatory agencies have in the past and in the future may continue to explicitly or implicitly require changes in our business or operations. Such a requirement may be judicially enforceable or impractical for us to contest, and if we are unable to comply with the requirement in a timely and effective manner, we have in the past and in the future may become subject to formal or informal enforcement and other supervisory actions, including memoranda of understanding, written agreements, cease-and-desist orders, and prompt-corrective-action or safety-and-soundness directives. In addition, compliance failures or other violations raised in connection with supervisory evaluations have in the past and in the future may continue to result in additional requirements for us to take certain remedial actions, including changes to our controls, operations or other processes. Compliance with such remedial actions may be costly and time consuming, and failure to comply in a timely manner that is sufficient from the perspective of the applicable regulatory agency could subject us to further remedial steps or enforcement actions. The financial-services industry continues to face increased scrutiny from supervisory authorities in the examination process, including through an increasing use of horizontal reviews from a broader industry perspective as well as strict enforcement of laws at federal, state, and local levels—particularly in connection with business and other practices that may harm or appear to harm consumers and compliance with anti-money-laundering, sanctions, and related laws. In addition, violations by other financial institutions relating to a particular business activity or practice may result in increased scrutiny, or increased penalties in connection with a related enforcement action, for similar activities. The amounts paid by financial institutions in settling proceedings or investigations and the severity of other terms of regulatory settlements are likely to remain elevated. In some cases, governmental authorities have required criminal pleas or other extraordinary terms, including admissions of wrongdoing and the imposition of monitors, as part of settlements. Supervisory actions could entail significant restrictions on our existing business, our ability to develop new business or make acquisitions, our flexibility in conducting operations, and our ability to pay dividends or utilize capital. Enforcement and other supervisory actions also can result in the imposition of civil monetary penalties or injunctions, related litigation by private plaintiffs, damage to our reputation, and a loss of customer or investor confidence, and a prior enforcement action may also increase the risk that regulators and governmental authorities pursue formal enforcement actions in connection with the resolution of an inquiry…

Excerpt shortened here; the source contains the full paragraph.

Previous wording

Our regulatory and supervisory environments—whether at international, federal, state, or local levels—are not static. No assurance can be given that applicable statutes, regulations, and other laws will not be amended or construed differently, that new laws will not be adopted, that any of these laws will not be enforced more aggressively, or that applicable laws, or the interpretation or enforcement thereof, may overlap, diverge or conflict across jurisdictions. Litigation challenging actions or regulations by federal or state authorities could, depending on the outcome, significantly affect the regulatory and supervisory framework affecting our operations. Changes in the regulatory and supervisory environments, including as a result of changes from recent elections in the United States and the corresponding change in administrative regimes, could adversely affect us in substantial and unpredictable ways, including by limiting the types of financial services and products we may offer, enhancing the ability of others to offer more competitive financial services and products, and restricting our ability to make acquisitions or pursue other profitable opportunities. Uncertainty about the timing and scope of future changes in laws, regulations and policies, or the interpretations thereof, may impact our decision making with respect to business activities or initiatives, and reacting to such changes could increase our operating and compliance costs. Further, our noncompliance with applicable laws—whether as a result of changes in interpretation or enforcement, system or human errors, or otherwise and, in some cases, regardless of whether noncompliance was inadvertent—could result in the suspension or revocation of licenses or registrations that we need to operate and in the initiation of enforcement and other supervisory actions or private litigation.

Current wording

Our regulatory and supervisory environments—whether at international, federal, state, or local levels—are not static. No assurance can be given that applicable statutes, regulations, and other laws will not be amended or construed differently, that new laws will not be adopted, that any of these laws will not be enforced more aggressively, or that applicable laws, or the interpretation or enforcement thereof, may overlap, diverge or conflict across jurisdictions. Litigation challenging actions or regulations by federal or state authorities could, depending on the outcome, significantly affect the regulatory and supervisory framework affecting our operations. Changes in the regulatory and supervisory environments, including as a result of changes from elections in the United States and the corresponding change in administrative regimes, could adversely affect us in substantial and unpredictable ways, including by limiting the types of financial services and products we may offer, enhancing the ability of others to offer more competitive financial services and products, and restricting our ability to make acquisitions or pursue other profitable opportunities. Uncertainty about the timing and scope of future changes in laws, regulations and policies, or the interpretations thereof, may impact our decision making with respect to business activities or initiatives, and reacting to such changes could increase our operating and compliance costs. Further, our noncompliance with applicable laws—whether as a result of changes in interpretation or enforcement, system or human errors, or otherwise and, in some cases, regardless of whether noncompliance was inadvertent—could result in the suspension or revocation of licenses or registrations that we need to operate and in the initiation of enforcement and other supervisory actions or private litigation.

Previous wording

Depending on the circumstances, to satisfy the FRB in its review of our capital plan, we may be required to further cease or limit capital distributions or to issue capital instruments that could be dilutive to shareholders. The FRB also may prevent us from maintaining or expanding lending or other business activities. Any of these developments, including the mere fact of being required by the FRB to revise or resubmit our capital plan and especially if unique to us or a group of firms like us, may damage our reputation and result in a loss of customer or investor confidence.

Current wording

Depending on the circumstances, to satisfy the FRB in its review of our capital plan, we may be required to further cease or limit capital distributions or to issue capital instruments that could be dilutive to shareholders. The FRB also may prevent us from maintaining or expanding lending or other business activities. Any of these developments, including the mere fact of being required by the FRB to revise or resubmit our capital plan may damage our reputation and result in a loss of customer or investor confidence.

Previous wording

Ally Bank is a key part of our funding strategy, and we place great reliance on deposits at Ally Bank as a source of funding. Our reliance on deposits as a source of funding has increased in recent years. As of December 31, 2024, deposits represented approximately 89% of our liability-based funding sources. Competition for deposits and deposit customers, however, is intense and has increased in recent years, making it more challenging for us to rely on customer acquisition as a primary source of new deposit funding. Further, the elevated level of short-term interest rates in recent years have resulted in, and are expected to continue to result in, more intense competition in deposit pricing and with respect to non-deposit financial products. Ally Bank does not have a branch network but, instead, obtains its deposits through online and other digital channels, from other business lines including customers of Ally Invest, and through deposit brokers. Brokered deposits may be more price sensitive than other types of deposits and may become less available if alternative investments offer higher returns. Our brokered deposits totaled $6.7 billion at December 31, 2024, which represented 4.4% of total deposit liabilities. In addition, our ability to maintain, grow, or favorably price deposits may be constrained by our focus on online and mobile banking, gaps in our product and service offerings, changes in consumer trends, our smaller scale relative to other financial institutions, competition from fintech companies and emerging financial-services providers, any failures or deterioration in our customer service, or any loss of confidence in our brand or our business. In the past, we have relied on deposit growth to fund our lending activities and other business initiatives. If we are unable to maintain or grow our deposit base to meet our business objectives and liquidity requirements, we may be required to raise alternative sources of capital, which may not be available to us when needed or on favorable terms. Increased costs of funding could adversely impact our profitability and financial position, or otherwise adversely affect our ability to conduct our current business activities or meet our growth objectives. Our level and cost of deposits also could be adversely affected by regulatory or supervisory restrictions, including any applicable prior approval requirements or limits on our offered rates or brokered deposit growth, and by changes in monetary or fiscal policies that influence deposit or other interest rates. Perceptions of our existing and future financial strength or the financial strength of the financial-services industry generally, rates or returns offered by other financial institutions or third-parties, and other competitive factors beyond our control, including returns on alternative investments, will also impact the size and cost of our deposit base. For example, Ally Bank could be subject to sudden withdrawals of deposits, includin…

Excerpt shortened here; the source contains the full paragraph.

Current wording

Ally Bank is a key part of our funding strategy, and we place great reliance on deposits at Ally Bank as a source of funding. Our reliance on deposits as a source of funding has increased in recent years. As of December 31, 2025, deposits represented approximately 87% of our liability-based funding sources. Competition for deposits and deposit customers, however, is intense and has increased in recent years, making it more challenging for us to rely on customer acquisition as a primary source of new deposit funding. Ally Bank does not have a branch network but, instead, obtains its deposits through online and other digital channels, from other business lines including customers of Ally Invest, and through deposit brokers. Brokered deposits may be more price sensitive than other types of deposits and may become less available if alternative investments offer higher returns. Our brokered deposits totaled $6.7 billion at December 31, 2025, which represented 4.4% of total deposit liabilities. In addition, our ability to maintain, grow, or favorably price deposits may be constrained by our focus on online and mobile banking, gaps in our product and service offerings, changes in consumer trends, our smaller scale relative to other financial institutions, competition from fintech companies and emerging financial-services providers, the recent resurgence of ILCs, the growth of digital assets and related platforms that may divert customer funds from traditional deposit products, any failures or deterioration in our customer service, or any loss of confidence in our brand or our business. In the past, we have relied on deposit growth to fund our lending activities and other business initiatives. If we are unable to maintain or grow our deposit base to meet our business objectives and liquidity requirements, we may be required to raise alternative sources of capital, which may not be available to us when needed or on favorable terms. Increased costs of funding could adversely impact our profitability and financial position, or otherwise adversely affect our ability to conduct our current business activities or meet our growth objectives. Our level and cost of deposits also could be adversely affected by regulatory or supervisory restrictions, including any applicable prior approval requirements or limits on our offered rates or brokered deposit growth, and by changes (including the pace of change) in monetary or fiscal policies that influence deposit or other interest rates. Perceptions of our existing and future financial strength or the financial strength of the financial-services industry generally, rates or returns offered by other financial institutions or third-parties, and other competitive factors beyond our control, including returns on alternative investments, will also impact the size and cost of our deposit base. For example, Ally Bank could be subject to sudden withdrawals of deposits, including as a result of negative media coverage, which may…

Excerpt shortened here; the source contains the full paragraph.

Previous wording

A fractious or volatile political environment in the United States, including any related social unrest, could negatively impact business and market conditions, economic growth, financial stability, and business, consumer, investor, and regulatory sentiments, any one or more of which in turn could cause our business and financial results to suffer. Uncertainty regarding government shutdowns, funding, debt ceilings or deficits could adversely affect economic and market conditions, as well as the credit rating of the United States. A default by the United States could result in unprecedented market volatility. A downgrade of the U.S. federal government’s credit rating, whether due to a default, concerns about a default or otherwise, could adversely affect financial markets and the value and liquidity of U.S. government securities. In addition, disruptions in the foreign relations of the United States could adversely affect the automotive and other industries on which our business depends and our tax positions and other dealings in foreign countries. We also could be negatively impacted by political scrutiny of the financial-services industry in general or our business or operations in particular, whether or not warranted, and by an environment where criticizing financial-services providers or their activities is politically advantageous.

Current wording

A fractious or volatile political environment in the United States, including any related social unrest, could negatively impact business and market conditions, economic growth, financial stability, and business, consumer, investor, and regulatory sentiments, any one or more of which in turn could cause our business and financial results to suffer. Uncertainty regarding government shutdowns, government funding, debt ceilings or deficits could adversely affect economic and market conditions, as well as the credit rating of the United States. A default by the United States on its debt obligations or additional prolonged government shutdowns could result in unprecedented market volatility. A downgrade of the U.S. federal government’s credit rating, whether due to a default, concerns about a default or otherwise, could adversely affect financial markets and the value and liquidity of U.S. government securities. In addition, disruptions in the foreign relations of the United States could adversely affect the automotive and other industries on which our business depends and our tax positions and other dealings in foreign countries. We also could be negatively impacted by political scrutiny of the financial-services industry in general or our business or operations in particular, whether or not warranted, and by an environment where criticizing financial-services providers or their activities is politically advantageous.

Previous wording

Our business and financial results may also be affected by changes in government policies following the 2024 U.S. election and the corresponding administrative transition. There remains significant market uncertainty as to how the outcome of the election and any corresponding policy changes could impact us or our clients. For example, the current U.S. administration has adopted and may consider additional tariffs, other controls on imports or exports, and other foreign policies that could affect our businesses and supply chain. Such developments could have an increased impact on our business to the extent they negatively impact the automobile industry, increase the cost of automobile repairs, reduce the purchasing power or credit quality of our customers or impact the ability of third parties to provide services upon which Ally depends. In addition, in recent years the U.S. federal government and the U.S. Treasury Department have been required to take specific measures to prevent the U.S. government from breaching the federal debt ceiling. Continued uncertainty as to the U.S. federal debt ceiling, or any federal government shutdown, downgrade in the U.S. sovereign credit rating or other adverse effects of a prolonged period of elevated budget deficits, including changes in fiscal and monetary policies, could have severe repercussions on us and our clients.

Current wording

Our business and financial results may also be affected by changes in government policies. For example, the current U.S. administration has adopted and may consider additional tariffs, other controls on imports or exports, and other foreign policies that could affect our businesses and supply chain. Such developments have negatively impacted our business and the automobile industry and could continue to do so. The long term impacts on the automobile industry remain uncertain and could negatively impact our business to the extent they increase the cost of automobile repairs, reduce the purchasing power or credit quality of our customers or impact the ability of third parties to provide services upon which Ally depends. In addition, in recent years the U.S. federal government and the U.S. Treasury Department have been required to take specific measures to prevent the U.S. government from breaching the federal debt ceiling. Continued uncertainty as to the

Previous wording

Additionally, changes to tax policies, or changes to the interpretations of existing policies, could have a significant impact on our results of operations and financial condition. For example, in August 2022, the Inflation Reduction Act was signed into law in the United States and, in part, imposes a 15% corporate alternative minimum tax on certain large corporations, such as Ally, and a surcharge on stock repurchases. Tax and other fiscal policies, moreover, impact not only general economic and market conditions but also give rise to incentives or disincentives that affect how we and our customers prioritize objectives, deploy resources, and run households or operate businesses. Both the timing and the nature of any changes in monetary or fiscal policies, as well as their consequences for the economy and the markets in which we operate, are beyond our control and difficult to predict but could adversely affect us.

Current wording

Additionally, changes to tax policies, or changes to the interpretations of existing policies, could have a significant impact on our results of operations and financial condition. Tax and other fiscal policies, moreover, impact not only general economic and market conditions but also give rise to incentives or disincentives that affect how we and our customers prioritize objectives, deploy resources, and run households or operate businesses. For example, the September 30, 2025 expiration of federal electric-vehicle tax credits for both new and used vehicles, in addition to vehicle recalls and OEM marketing incentives, have negatively impacted both consumer demand for electric vehicles and the residual value of electric vehicles subject to an automotive operating lease. Both the timing and the nature of any changes in monetary or fiscal policies, as well as their consequences for the economy and the markets in which we operate, are beyond our control and difficult to predict but could adversely affect us.

Previous wording

More broadly, the U.S. federal government, U.S. states and certain other countries and regions have adopted or are considering legislation, regulation or policies that reflect diverse, diverging and, in some cases, potentially conflicting policy goals, for example, on social and environmental topics such as climate change, corporate diversity, equity and inclusion and companies’ actions, commitments and initiatives on such issues. Compliance with such laws, regulations or policies, including any that may be adopted in the future, could, among other things, increase the costs of operating our businesses, reduce the demand for our products and services, impact our ability to meet or maintain current or future goals or targets or continue initiatives (including our sustainability targets or diversity, equity and inclusion initiatives), and increase our legal, operational and reputational risks, any or all of which could materially adversely affect our results of operations. Failure, or perceived failure, to comply with any legislation, regulation or policy, including as a result of making good faith interpretations that may differ from those taken by enforcement authorities in relevant jurisdictions, could potentially result in substantial fines, criminal sanctions, reputational harm or operational changes. Moreover, our customers, shareholders, employees and other stakeholders have a full range of expectations, demands and perspective on environmental, social and other topics, which are continuing to evolve. We may not be able to meet the full range of expectations and demands of all of our stakeholders, which could harm our reputation, reduce customer demand for our products and services, and subject us to legal and operational risks.

Current wording

More broadly, the U.S. federal government, U.S. states and certain other countries and regions have adopted or are considering legislation, regulation or policies that reflect diverging and, in some cases, potentially conflicting policy goals. Compliance with such laws, regulations or policies, including any that may be adopted in the future, could, among other things, increase the costs of operating our businesses, reduce the demand for our products and services, impact our ability to meet or maintain current or future goals or targets or continue initiatives, and increase our legal, operational and other risks, any or all of which could materially adversely affect our results of operations. Failure, or perceived failure, to comply with any legislation, regulation or policy, including as a result of making good faith interpretations that may differ from those taken by enforcement authorities in relevant jurisdictions, could potentially result in substantial fines, criminal sanctions, reputational harm or operational changes. Changes in administration priorities can also lead to shifts in supervisory or enforcement focus—for example, public debates around “debanking” and related account-closure practices—which may alter regulatory expectations and increase compliance and reputational risks. Moreover, our customers, shareholders, employees and other stakeholders have a full range of expectations, demands and perspective on environmental, social and other topics, which are continuing to evolve. We may not be able to meet the full range of expectations and demands of all of our stakeholders, which could harm our reputation, reduce customer demand for our products and services, and subject us to legal and operational risks.

Previous wording

Cybersecurity and data-privacy risks have received heightened legislative and regulatory attention and have been a specific focus area in supervisory reviews. For example, in 2021 the U.S. banking agencies adopted a final rule requiring us to notify the FRB within 36 hours of any significant computer security incident and have proposed enhanced cyber risk management standards applicable to us and our service providers that would address cyber risk governance and management, management of internal and external dependencies, and incident response, cyber resilience, and situational awareness. In addition, rulemakings by the SEC and the CFPB have commenced to further regulate cybersecurity risk governance (including incident disclosure) and personal-financial-data rights, respectively. Several states and their governmental agencies, such as the NYDFS, also have adopted or proposed cybersecurity and data-privacy laws. Privacy laws in the State of California, for example, require regulated entities to establish measures to identify, manage, secure, track, produce, and delete personal information. Failure to comply with privacy laws or supervisory expectations could result in enforcement actions, civil litigation or reputational damages.

Current wording

Cybersecurity and data-privacy risks have received heightened legislative and regulatory attention and have been a specific focus area in supervisory reviews. In recent years, governments and regulators in multiple jurisdictions have adopted or proposed to adopt additional legal requirements focused on cybersecurity risk management, governance and disclosure, as well as data privacy and personal financial data rights. For example, U.S. banking agencies have adopted rules requiring us to notify the FRB within 36 hours of any significant computer security incident and have proposed enhanced cyber risk management standards applicable to us and our service providers that would address cyber risk governance and management, management of internal and external dependencies, and incident response, cyber resilience, and situational awareness. Several states and their governmental agencies, such as the NYDFS, also have adopted or proposed cybersecurity and data-privacy laws. Failure to comply with privacy laws or supervisory expectations could result in enforcement actions, civil litigation or reputational damages.

Previous wording

Governments and policymakers at the federal, state, local and international levels are increasingly focused on climate- and other sustainability-related issues, including the potential for climate-related risks to impact the safety and soundness of large financial institutions. Furthermore, in recent years, there has been increasing divergence in how government and policy makers are approaching these issues. See the risk factor above, titled Our business and financial results could be adversely affected by the political environment and governmental fiscal and monetary policies.

Current wording

Furthermore, in recent years, there has been increasing divergence in how government and policy makers are approaching these issues. See the risk factor above, titled Our business and financial results could be adversely affected by the political environment and governmental fiscal and monetary policies.

Previous wording

For example, in recent years, there have been efforts by international, federal, state and local governments and regulators to mandate certain climate-related disclosures. Several states, including California, have enacted or proposed legislation, regulations or policies that would require companies to publish detailed information on its climate-related performance and governance, or otherwise address climate change and other sustainability issues. At the same time, there have been efforts by other governments and policymakers to prohibit or limit the extent to which companies, including financial institutions, factor sustainability considerations into their business and operations. Several states have enacted or proposed statutes, regulations or policies to that effect.

Current wording

For example, in recent years, there have been efforts by international, federal, state and local governments and regulators to mandate certain climate-related disclosures. Several states, including California, have enacted or proposed legislation, regulations or policies that would require companies to publish detailed information on its climate-related performance and governance, or otherwise address climate and other sustainability related matters. At the same time, there have been efforts by other governments and policymakers to prohibit or limit the extent to which companies, including financial institutions, factor sustainability considerations into their business and operations. Several states have enacted or proposed statutes, regulations or policies to that effect.

Previous wording

As a result of these and similar future developments at the federal, state, local and international levels, we may become subject to different and potentially conflicting requirements and expectations in the various jurisdictions in which we operate. Many of these requirements are subject to uncertainty, including as a result of the ongoing development of rules and regulatory guidance, as well as pending legal challenges as to the validity of certain requirements. Following the recent election in the United States and in connection with the corresponding administrative transition, there remains uncertainty as to how and to what extent these policies may further evolve. Compliance with these different and evolving requirements has required, and may continue to require, us to adopt new reporting or other governance processes, which may be more complicated or costly due to diverging requirements, uncertainties or conflicts across jurisdictions. In addition, with respect to sustainability reporting requirements adopted in various jurisdictions, climate- and sustainability-related data may be based on new and changing reporting practices or based on data that is only available to third parties, which may impact the quality and consistency of the data.

Current wording

As a result of these and similar future developments at the federal, state, local and international levels, we may become subject to different and potentially conflicting requirements and expectations in the various jurisdictions in which we operate. Many of these requirements are subject to uncertainty, including as a result of the ongoing development of rules and regulatory guidance, as well as pending legal challenges as to the validity of certain requirements. Compliance with these different and evolving requirements has required, and may continue to require, us to adopt new reporting or other governance processes, which may be more complicated or costly due to diverging requirements, uncertainties or conflicts across jurisdictions. In addition, with respect to sustainability reporting requirements adopted in various jurisdictions, climate- and sustainability-related data may be based on new and changing reporting practices or based on data that is only available to third parties, which may impact the quality and consistency of the data.

Previous wording

Failure to adequately respond to the changing regulatory environment or stakeholder expectations with respect to climate- or sustainability-related issues, including climate-related disclosure, could result in increases costs, a reduction in business opportunities, subject us to additional legal or regulatory proceedings or otherwise adversely affect our operations, reputation and our financial results. Further, it is possible that government responses to actual or perceived changes in climate and related sustainability risks may occur more rapidly than we (or third-parties on whom we rely for certain climate- or other sustainability-related information or services) are able to adapt. Our ability to comply with these requirements and expectations, including responses to any inquiry or investigation from a regulatory agency, could have a material adverse effect on our operations, reputation and our financial results.

Current wording

Failure to adequately respond to the changing regulatory environment or stakeholder expectations with respect to climate- or sustainability-related matters, including climate-related disclosure, could result in increased costs, subject us to additional legal or regulatory proceedings or otherwise adversely affect our operations, reputation and our financial results. Further, it is possible that government responses to actual or perceived changes in climate and related sustainability risks may occur more rapidly than we (or third-parties on whom we rely for certain climate- or other sustainability-related information or services) are able to adapt. Our ability to comply with these requirements and expectations, including responses to any inquiry or investigation from a regulatory agency, could have a material adverse effect on our operations, reputation and our financial results.

Previous wording

How governments act to address climate and related sustainability risks, as well as associated changes in the behavior and preferences of businesses and consumers, could have an adverse effect on our business and financial results. For example, physical and transition risks associated with climate change could affect households, communities, businesses, and governments, which could impede business activity, affect household incomes, and alter the value of assets and liabilities. These risks are often difficult to quantify or predict, and may be propagated through the economy and financial system, the financial sector may experience credit and market risks associated with loss of income, defaults and changes in the values of assets, liquidity risks associated with changing demand for liquidity, operational risks associated with disruptions to infrastructure or other channels, or legal risks. As a result, we may change or cease some of our business or operational practices or incur additional capital, compliance, and other costs. The risks associated with climate change are rapidly changing and evolving in an escalating fashion, making them difficult to assess due to limited data.

Current wording

How governments act to address climate and related sustainability risks, as well as associated changes in the behavior and preferences of businesses and consumers, could have an adverse effect on our business and financial results. For example, physical and transition risks associated with climate-related risks and extreme weather events could affect households, communities, businesses, and governments, which could impede business activity, affect household incomes, and alter the value of assets and liabilities. These risks are often difficult to quantify or predict, and may be propagated through the economy and financial system, the financial sector may experience credit and market risks associated with loss of income, defaults and changes in the values of assets, liquidity risks associated with changing demand for liquidity, operational risks associated with disruptions to infrastructure or other channels, or legal risks. As a result, we may change or cease some of our business or operational practices or incur additional capital, compliance, and other costs. Climate-related risks are rapidly changing and evolving in an escalating fashion, making them difficult to assess due to limited data.

Previous wording

Weak or deteriorating economic conditions, failures in underwriting, changes in underwriting standards, financial or systemic shocks, or continued growth in our nonprime or used vehicle financing business could increase our credit risk, which could adversely affect our business and financial results.

Current wording

Weak or deteriorating economic conditions, failures in underwriting, changes in underwriting standards, failures in servicing loans and operating leases, financial or systemic shocks, or continued growth in our nonprime or used vehicle financing business could increase our credit risk, which could adversely affect our business and financial results.

Previous wording

Our business and financial results depend significantly on household, business, economic, and market conditions. When those conditions are weak or deteriorating, we could simultaneously experience reduced demand for credit and increased delinquencies or defaults, including in the loans that we have securitized and in which we retain a residual interest. These kinds of conditions also could dampen the demand for products and services in our insurance, banking, brokerage, advisory, and other businesses. Increased delinquencies or defaults could also result from our failing to appropriately underwrite loans and operating leases that we originate or purchase or from our adopting—for strategic, competitive, or other reasons—more liberal underwriting standards. If delinquencies or defaults on our loans and operating leases increase, their value and the income derived from them could be adversely affected, and we could incur increased administrative and other costs in seeking a recovery on claims and any collateral. If unfavorable conditions are negatively affecting used vehicle or other collateral values at the same time, the amount and timing of recoveries could suffer as well. For example, net charge offs and delinquencies in our consumer automotive lending portfolio remained elevated in 2024 as our customers faced challenging economic conditions, such as prolonged periods of inflation and high interest rates. If the economic conditions impacting the credit quality of our customers were to worsen, we could be subject to significant losses in our credit portfolio. Weak or deteriorating economic conditions also may negatively impact the market value and liquidity of our investment securities, and we may be required to record additional impairment charges that adversely affect earnings if debt securities suffer a decline in value that is considered other-than-temporary. There can be no assurance that our forecasts of economic conditions, our assessments and monitoring of credit risk, and our efforts to mitigate credit risk through risk-based pricing, appropriate underwriting and investment policies, loss-mitigation strategies, and diversification are, or will be, sufficient to prevent an adverse impact to our business and financial results. In addition, because of CECL, our financial results may be negatively affected as soon as weak or deteriorating economic conditions are forecasted and alter our expectations for credit losses. A financial or systemic shock and a failure of a significant counterparty or a significant group of counterparties could negatively impact us as well, possibly to a severe degree, due to our role as a financial intermediary and the interconnectedness of the financial system.

Current wording

Our business and financial results depend significantly on household, business, economic, and market conditions. When those conditions are weak or deteriorating, we could simultaneously experience reduced demand for credit and increased delinquencies or defaults, including in the loans that we have securitized and in which we retain a residual interest. These kinds of conditions also could dampen the demand for products and services in our insurance, banking, brokerage, advisory, and other businesses. Increased delinquencies or defaults could also result from our failing to appropriately underwrite loans and operating leases that we originate or purchase or from our adopting—for strategic, competitive, or other reasons—more liberal underwriting standards. If delinquencies or defaults on our loans and operating leases increase, their value and the income derived from them could be adversely affected, and we could incur increased administrative and other costs in seeking a recovery on claims and any collateral. If unfavorable conditions are negatively affecting used vehicle or other collateral values at the same time, the amount and timing of recoveries could suffer as well. If the economic conditions impacting the credit quality of our customers were to worsen, we could be subject to significant losses in our credit portfolio. Weak or deteriorating economic conditions also may negatively impact the market value and liquidity of our investment securities, and we may be required to record additional impairment charges that adversely affect earnings if debt securities suffer a decline in value. There can be no assurance that our forecasts of economic conditions, our assessments and monitoring of credit risk, and our efforts to mitigate credit risk through risk-based pricing, appropriate underwriting and investment policies, loss-mitigation strategies, and diversification are, or will be, sufficient to prevent an adverse impact to our business and financial results. A financial or systemic shock and a failure of a significant counterparty or a significant group of counterparties could negatively impact us as well, possibly to a severe degree, due to our role as a financial intermediary and the interconnectedness of the financial system.

Previous wording

We continue to have exposure to nonprime consumer automotive financing and used vehicle financing. We define nonprime consumer automotive loans primarily as those loans with a FICO® Score (or an equivalent score) at origination of less than 620. Customers that finance used vehicles tend to have lower FICO® Scores as compared to new vehicle customers, and defaults resulting from vehicle breakdowns are more likely to occur with used vehicles as compared to new vehicles that are financed. The carrying value of our nonprime consumer automotive loans before allowance for loan losses was $8.2 billion, or approximately 9.7% of our total consumer automotive loans at December 31, 2024, as compared to $8.7 billion, or approximately 10.3% of our total consumer automotive loans at December 31, 2023. At December 31, 2024, and 2023, $286 million and $258 million, respectively, of nonprime consumer automotive loans were considered nonperforming as they had been placed on nonaccrual status in accordance with our accounting policies. Refer to the Nonaccrual Loans section of Note 1 to the Consolidated Financial Statements for additional information. Additionally, the carrying value of our consumer automotive used vehicle loans before allowance for loan losses was $57.4 billion, or approximately 68.5% of our total consumer automotive loans at December 31, 2024, as compared to $57.6 billion, or approximately 68.3% of our total consumer automotive loans at December 31, 2023. If our exposure to nonprime consumer automotive loans or used vehicle financing continue to increase over time, our credit risk will increase to a possibly significant degree.

Current wording

We continue to have exposure to nonprime consumer automotive financing and used vehicle financing. We define nonprime consumer automotive loans primarily as those loans with a FICO® Score (or an equivalent score) at origination of less than 620. Customers that finance used vehicles tend to have lower FICO® Scores as compared to new vehicle customers, and defaults resulting from vehicle breakdowns are more likely to occur with used vehicles as compared to new vehicles that are financed. The carrying value of our nonprime consumer automotive loans before allowance for loan losses was $8.6 billion, or approximately 10.1% of our total consumer automotive loans at December 31, 2025, as compared to $8.2 billion, or approximately 9.7% of our total consumer automotive loans at December 31, 2024. At December 31, 2025, and 2024, $262 million and $286 million, respectively, of nonprime consumer automotive loans were considered nonperforming as they had been placed on nonaccrual status in accordance with our accounting policies. Refer to the Nonaccrual Loans section of Note 1 to the Consolidated Financial Statements for additional information. Additionally, the carrying value of our consumer automotive used vehicle loans before allowance for loan losses was $58.6 billion, or approximately 68.5% of our total consumer automotive loans at December 31, 2025, as compared to $57.4 billion, or approximately 68.5% of our total consumer automotive loans at December 31, 2024. If our exposure to nonprime consumer automotive loans or used vehicle financing continue to increase over time, our credit risk will increase to a possibly significant degree.

Previous wording

As part of the underwriting process, we rely heavily upon information supplied by applicants and other third-parties, such as credit reporting agencies, automotive dealers and retailers (in the case of automotive consumer and commercial loans), and service providers (in the case of unsecured personal loans). If any of this information is intentionally or negligently misrepresented and the misrepresentation is not detected before completing the transaction, we may experience increased credit risk.

Current wording

As part of the underwriting process, we rely heavily upon information supplied by applicants and other third-parties, such as credit reporting agencies, automotive dealers and retailers (in the case of automotive consumer and commercial loans), and service providers. If any of this information is intentionally or negligently misrepresented and the misrepresentation is not detected before completing the transaction, we may experience increased credit risk.

Previous wording

On January 1, 2020, we adopted CECL to measure credit losses for financial assets measured at amortized cost, which includes the vast majority of our finance receivables and loan portfolio. Under CECL, the allowance is established to reserve for management’s best estimate of expected lifetime losses inherent in our finance receivables and loan portfolio.

Current wording

Under CECL, we measure credit losses for financial assets measured at amortized cost basis, which includes the vast majority of our finance receivables and loan portfolio. The allowance is established to reserve for management’s best estimate of expected lifetime losses inherent in our finance receivables and loan portfolio.

Previous wording

The determination of the appropriate level of the allowance for loan losses inherently involves a high degree of subjectivity and requires us to make significant estimates of current and future credit risks using existing quantitative and qualitative information, all of which may change substantially over time. Changes in economic conditions affecting borrowers, revisions to accounting rules and related guidance, new qualitative or quantitative information about existing loans, identification of additional problem loans, changes in the size or composition of our finance receivables and loan portfolio, changes to or errors in our models or loss estimation techniques including consideration of forecasted economic assumptions, the impact of natural disasters and other catastrophic events that may be difficult to predict and other factors, both within and outside of our control, may require an increase in the allowance for loan losses. For example, due to the nature of our business, our financial position and results of operations are specifically susceptible to risks associated with increases in factors such as interest rates, unemployment, or inflation, or decreases in GDP, real personal income, used vehicle values, or home values, beyond what is reflected in our models, all of which could result in an increased inability for consumers to pay their loans, and may result in an increase in the allowance for loan losses. Additionally, our shift to a full credit spectrum consumer automotive finance portfolio over the past several years has resulted in additional increases in our allowance for loan losses, and could result in additional increases in the future. Any increase in the allowance in future periods may adversely affect our financial condition or results of operations. Refer to the risk factor below, titled Our business and operations make extensive use of models, and we could be adversely affected if our design, implementation, or use of models is flawed, for more information on how risks associated with our use of models could affect our allowance for loan losses.

Current wording

The determination of the appropriate level of the allowance for loan losses inherently involves a high degree of subjectivity and requires us to make significant estimates of current and future credit risks using existing quantitative and qualitative information, all of which may change substantially over time. Changes in economic conditions affecting borrowers, revisions to accounting rules and related guidance, new qualitative or quantitative information about existing loans, identification of additional problem loans, changes in the size or composition of our finance receivables and loan portfolio, changes to or errors in our models, data, or loss estimation techniques including consideration of forecasted economic assumptions, the impact of natural disasters and other catastrophic events that may be difficult to predict and other factors, both within and outside of our control, may require an increase in the allowance for loan losses. For example, due to the nature of our business, our financial position and results of operations are specifically susceptible to risks associated with increases in factors such as interest rates, unemployment, or inflation, or decreases in GDP, real personal income, used vehicle values, or home values, beyond what is reflected in our models, all of which could result in an increased inability for consumers to pay their loans, and may result in an increase in the allowance for loan losses. Any increase in the allowance in future periods may adversely affect our financial condition or results of operations. Refer to the risk factor below, titled Our business and operations make extensive use of models and certain other qualified tools, and we could be adversely affected if our design, implementation, or use of models and certain other qualified tools are flawed, for more information on how risks associated with our use of models could affect our allowance for loan losses.

Previous wording

Our share of commercial wholesale financing remains at risk of decreasing in the future as a result of intense competition and other factors. The number of dealers with whom we have wholesale relationships decreased approximately 5% as of December 31, 2024, compared to December 31, 2023. If we are not able to maintain existing relationships with significant automotive dealers or if we are not able to develop new relationships for any reason—including if we are not able to provide services on a timely basis, offer products and services that meet the needs of the dealers, compete successfully with the products and services of our competitors, or effectively counter the influence that captive automotive finance companies have in the marketplace or the exclusivity privileges that some competitors have with automotive manufacturers—our wholesale funding volumes, and the number of dealers with whom we have retail funding relationships, could decline in the future. If this were to occur, our business, results of operations, financial condition, or prospects could be adversely affected.

Current wording

Our share of commercial wholesale financing remains at risk of decreasing in the future as a result of intense competition and other factors. The number of dealers with whom we have wholesale relationships decreased approximately 3% as of December 31, 2025, compared to December 31, 2024. If we are not able to maintain existing relationships with significant automotive dealers or if we are not able to develop new relationships for any reason—including if we are not able to provide services on a timely basis, offer products and services that meet the needs of the dealers, compete successfully with the products and services of our competitors, or effectively counter the influence that captive automotive finance companies have in the marketplace or the exclusivity privileges that some competitors have with automotive manufacturers—our wholesale funding volumes, and the number of dealers with whom we have retail funding relationships, could decline in the future. If this were to occur, our business, results of operations, financial condition, or prospects could be adversely affected. In addition, the recent resurgence of ILCs could heighten competitive pressures, as ILCs—affiliated with fintech, technology-enabled companies, or OEMs—can offer bank-like products without being subject to the full scope of regulation and supervision applicable to bank holding companies, which could enable ILCs and similar institutions to compete more aggressively against us.

Previous wording

While we continue to diversify our automotive finance and insurance businesses and to expand into other financial services, GM and Stellantis dealers and their retail customers still constitute a significant portion of our customer base. In 2024, 30% of our new vehicle dealer inventory financing and 22% of our consumer automotive financing volume were transacted for GM dealers and customers, and 46% of our new vehicle dealer inventory financing and 16% of our consumer automotive financing volume were transacted for Stellantis dealers and customers. In 2023, 28% of our new vehicle dealer inventory financing and 23% of our consumer automotive financing volume were transacted for GM dealers and customers, and 53% of our new vehicle dealer inventory financing and 20% of our consumer automotive financing volume were transacted for Stellantis dealers and customers. A significant adverse change in GM’s or Stellantis’ business—including, for example, in the production or sale of GM or Stellantis vehicles, the quality or resale value of GM or Stellantis vehicles, GM’s or Stellantis’ relationships with its key suppliers, or the rate or volume of recalls of GM or Stellantis vehicles—could negatively impact our GM and Stellantis dealer and retail customer bases and the value of collateral securing our extensions of credit to them. Any future reductions in GM and Stellantis business that we are not able to offset could adversely affect our business and financial results. Refer to Note 29 to the Consolidated Financial Statements for additional information.

Current wording

While we continue to diversify our automotive finance and insurance businesses and to expand into other financial services, GM and Stellantis dealers and their retail customers still constitute a significant portion of our customer base. In 2025, 34% of our new vehicle dealer inventory financing and 24% of our consumer automotive financing volume were transacted for GM dealers and customers, and 36% of our new vehicle dealer inventory financing and 13% of our consumer automotive financing volume were transacted for Stellantis dealers and customers. In 2024, 30% of our new vehicle dealer inventory financing and 22% of our consumer automotive financing volume were transacted for GM dealers and customers, and 46% of our new vehicle dealer inventory financing and 16% of our consumer automotive financing volume were transacted for Stellantis dealers and customers. A significant adverse change in GM’s or Stellantis’ business—including, for example, in the production or sale of GM or Stellantis vehicles, the quality or resale value of GM or Stellantis vehicles, GM’s or Stellantis’ relationships with its key suppliers, or the rate or volume of recalls of GM or Stellantis vehicles—could negatively impact our GM and Stellantis dealer and retail customer bases and the value of collateral securing our extensions of credit to them. Any future reductions in GM and Stellantis business that we are not able to offset would adversely affect our business and financial results. Refer to Note 29 to the Consolidated Financial Statements for additional information.

Previous wording

Our automotive finance and insurance businesses can be impacted by the sales volume for new and used vehicles. Vehicle sales are impacted, in turn, by several economic and market conditions, including employment levels, household income and savings, interest rates, credit availability, inventory levels, customer preferences, and fuel costs. For example, new vehicle sales decreased dramatically during the economic crisis that began in 2007–2008 and did not rebound significantly until 2012 and 2013. A meaningful rise in inflation during 2021 and through 2023 prompted the FRB to sharply increase the federal funds rate during 2022 and 2023, before it decreased the rate at the end of 2024. The FRB may further raise or lower interest rates in response to economic conditions, particularly inflationary pressures and unemployment statistics. The current level of borrowing costs has adversely affected demand for new and used vehicles and could continue to do so in the future. Any future declines in new or used vehicle sales, including as a result of market conditions and other external factors over which we do not control, could have an adverse effect on our business and financial results.

Current wording

Our automotive finance and insurance businesses are impacted by the sales volume for new and used vehicles. Vehicle sales are impacted, in turn, by several economic and market conditions, including employment levels, household income and savings, vehicle affordability, interest rates, credit availability, inventory levels, customer preferences, and fuel costs. Any future declines in new or used vehicle sales, including as a result of market conditions and other external factors over which we do not control, could have an adverse effect on our business and financial results.

Previous wording

During the year ended December 31, 2024, approximately 59% of our average earning assets were composed of vehicle loans or operating leases and related residual securitization interests. If we experience higher losses on the sale of repossessed vehicles or lower or more volatile residual values for off-lease vehicles, our business or financial results could be adversely affected.

Current wording

During the year ended December 31, 2025, approximately 60% of our average earning assets were composed of vehicle loans or operating leases and related residual securitization interests. If we experience higher losses on the sale of repossessed vehicles or lower or more volatile residual values for off-lease vehicles, our business or financial results could be adversely affected.

Previous wording

General economic conditions, the supply of off-lease and other vehicles to be sold, the levels of demand for vehicle ownership and use, relative market prices for new and used vehicles, perceived vehicle quality, the shift from gasoline to electric vehicles, overall vehicle prices, the vehicle disposition channel, volatility in gasoline or diesel fuel prices, levels of household income and savings, interest rates, and other factors outside of our control heavily influence used vehicle prices. Consumer confidence levels and the strength of automotive manufacturers, dealers, and retailers can also influence the used vehicle market. For example, during the economic crisis that began in 2007–2008, sharp declines in used vehicle demand and sale prices adversely affected our remarketing proceeds and financial results.

Current wording

General economic conditions, the supply of off-lease and other vehicles to be sold, the levels of demand for vehicle ownership and use, relative market prices for new and used vehicles, perceived vehicle quality, how OEM’s prioritize gasoline and electric vehicles, overall vehicle prices, the vehicle disposition channel, volatility in gasoline or diesel fuel prices, levels of household income and savings, interest rates, and other factors outside of our control heavily influence used vehicle prices. Consumer confidence levels and the strength of automotive manufacturers, dealers, and retailers can also influence the used vehicle market.

Previous wording

Our expectation of the residual value of a vehicle subject to an automotive operating lease contract is a critical element used to determine the amount of the operating lease payments under the contract at the time the customer enters into it. As a result, to the extent that the actual residual value of the vehicle—as reflected in the sale proceeds received upon remarketing at lease termination—is less than the expected residual value for the vehicle at lease inception, we will incur additional depreciation expense and lower profit on the operating lease transaction than our priced expectations. Our expectation of used vehicle values is also a factor in determining our pricing of new loan and operating lease originations. In stressed economic environments, residual-value risk may be even more volatile than credit risk. To the extent that used vehicle prices are significantly lower than our expectations, our profit on vehicle loans and operating leases could be substantially less than our expectations, even more so if our estimate of loss frequency is underestimated as well. In addition, we could be adversely affected if we fail to efficiently process and effectively market off-lease vehicles and repossessed vehicles and, as a consequence, incur higher-than-expected disposal costs or lower-than-expected proceeds from the vehicle sales.

Current wording

Our expectation of used vehicle values is also a factor in determining our pricing of new loan and operating lease originations. In stressed economic environments, residual-value risk may be even more volatile than credit risk. To the extent that used vehicle prices are significantly lower than our expectations, our profit on vehicle loans and operating leases could be substantially less than our expectations, even more so if our estimate of loss frequency is underestimated as well. In addition, we could be adversely affected if we fail to efficiently process and effectively market off-lease vehicles and repossessed vehicles and, as a consequence, incur higher-than-expected disposal costs or lower-than-expected proceeds from the vehicle sales.

Previous wording

We are highly dependent on net interest income, which is the difference between interest income on earning assets (such as loans and investments) and interest expense on deposits and borrowings. Net interest income is significantly affected by market rates of interest, which in turn are influenced by monetary and fiscal policies, general economic and market conditions (including high or increasing levels of inflation), the political and regulatory environments, business and consumer sentiment, competitive pressures, and expectations about the future (including future changes in interest rates). We may be adversely affected by policies, laws, and events that have the effect of flattening or inverting the yield curve (that is, the difference between long-term and short-term interest rates), depressing the interest rates associated with our earning assets to levels near the rates associated with our interest expense, increasing the volatility of market rates of interest (including the rate of change), or changing the spreads among different interest rate indices. As of December 31, 2024, our balance sheet is modestly asset sensitive in the near term due to our floating-rate assets and pay-fixed hedge position. However, our balance sheet remains liability sensitive over the medium term, driven by the assumed repricing of our deposits and market-based funding outpacing the assumed repricing of our floating-rate assets and pay-fixed swaps, which will also begin to roll down.

Current wording

We are highly dependent on net interest income, which is the difference between interest income on earning assets (such as loans and investments) and interest expense on deposits and borrowings. Net interest income is significantly affected by market rates of interest, which in turn are influenced by monetary and fiscal policies, general economic and market conditions (including high or increasing levels of inflation), the political and regulatory environments, business and consumer sentiment, competitive pressures, and expectations about the future (including future changes in interest rates). We may be adversely affected by policies, laws, and events that have the effect of flattening or inverting the yield curve (that is, the difference between long-term and short-term interest rates), depressing the interest rates associated with our earning assets to levels near the rates associated with our interest expense, increasing the volatility of market rates of interest (including the rate of change), or changing the spreads among different interest rate indices. As of December 31, 2025, our balance sheet is modestly asset sensitive in the near term due to our floating-rate assets and pay-fixed hedge position. However, our balance sheet remains liability sensitive over the medium term, driven by the assumed repricing of our deposits and market-based funding outpacing the assumed repricing of our floating-rate assets and pay-fixed swaps.

Previous wording

The level of and changes in market rates of interest—and, as a result, these risks and uncertainties—are beyond our control. The dynamics among these risks and uncertainties are also challenging to assess and manage. For example, while an accommodative monetary policy may benefit us to some degree by spurring economic activity among our customers, such a policy may ultimately cause us more harm by inhibiting our ability to grow or sustain net interest income. A rising interest rate environment can pose different challenges, such as potentially slowing the demand for credit, increasing delinquencies and defaults, and reducing the values of our loans and fixed-income securities. Market volatility in interest rates, including the rate of change, can create particularly difficult conditions. During 2021 and through 2023, following a meaningful rise in inflation, the FRB sharply increased the federal funds rate. The federal funds target range reached 5.25–5.50% in 2023. However, the Federal Reserve lowered the federal funds target range in 2024 to 4.25–4.50% in response to easing inflation trends and moderate labor market pressures. The timing, pace and direction of additional interest rate changes remains uncertain, and will largely depend on trends in inflation, employment and other macroeconomic factors that are outside of our control, and could have a significant impact on our net interest income, allowances for loan losses, the value of securities portfolio and our results of operation and financial position. Refer to the section titled Market Risk in the MD&A that follows and Note 21 to the Consolidated Financial Statements.

Current wording

The level of and changes in market rates of interest—and, as a result, these risks and uncertainties—are beyond our control. The dynamics among these risks and uncertainties are also challenging to assess and manage. For example, while an accommodative monetary policy may benefit us to some degree by spurring economic activity among our customers, such a policy may ultimately cause us more harm by inhibiting our ability to grow or sustain net interest income. A rising interest rate environment can pose different challenges, such as potentially slowing the demand for credit, increasing delinquencies and defaults, and reducing the values of our loans and fixed-income securities. Market volatility in interest rates, including the rate of change, can create particularly difficult conditions. During 2021 and through 2023, following a meaningful rise in inflation, the FRB sharply increased the federal funds rate. The federal funds target range reached 5.25–5.50% in 2023. However, the Federal Reserve gradually lowered the federal funds target range during 2024 and 2025, to 3.50–3.75% as of December 31, 2025, in response to easing inflation trends and labor market pressures. The timing, pace and direction of additional interest rate changes remains uncertain, and will largely depend on trends in inflation, employment and other macroeconomic factors that are outside of our control, and could have a significant impact on our net interest income, allowances for loan losses, the value of securities portfolio and our results of operation and financial position. Refer to the section titled Market Risk in the MD&A that follows and Note 21 to the Consolidated Financial Statements.

Previous wording

We seek to distinguish ourselves as a customer-centric company that delivers passionate customer service and innovative financial solutions and that is relentlessly focused on “Doing it Right.” Third-party service providers, however, are key to much of our business and operations, including online and mobile banking, brokerage, customer service, and operating systems and infrastructure. We rely on our third-party service providers to provide critical products and services to facilitate our business activities, including by providing data and information, technology, security and other infrastructure services. While we have implemented a supplier-risk-management program and can exert varying degrees of influence over our service providers, we do not control them, their actions, or their businesses. Our contracts with service providers, moreover, may not require or sufficiently incent them to perform at levels and in ways that we would choose to act on our own. Despite our supplier-risk-management program, there can be no assurance that our third-party service providers will notify us of any potential risks or incidents in a timely manner or that our risk-management procedures will be effective in mitigating the impact of actions by third-party service providers on our business. Service providers have not always met our requirements and expectations, and no assurance can be provided that in the future they will perform to our standards, adequately represent our brand, comply with applicable law, appropriately manage their own risks (including cybersecurity), remain financially or operationally viable, abide by their contractual obligations, or continue to provide us with the services that we require. In such a circumstance, our ability to deliver products and services to customers, to satisfy customer expectations, and to otherwise successfully conduct our business and operations have been and, in the future, could be adversely affected. These risks are amplified to the extent that we or our third-party service providers make use of cloud computing, artificial intelligence or other emerging technologies that may make our systems and those of our third-party service providers more susceptible to cyberattacks, which in turn could have an adverse effect on our business and operations to the extent that they are not able to mitigate their cybersecurity risks. In addition, we may need to incur substantial expenses to address issues of concern with a service provider, and if the issues cannot be acceptably resolved, we may not be able to timely or effectively replace the service provider due to contractual restrictions, the unavailability of acceptable alternative providers, or other reasons. Further, regardless of how much we can influence our service providers, issues of concern with them could result in supervisory actions and private litigation against us and could harm our reputation, business, and financial results.

Current wording

We rely on third-party service providers to support our business and operations, including online and mobile banking, brokerage, customer service, financial reporting, and operating systems and infrastructure. We rely on our third-party service providers to provide critical products and services to facilitate our business activities, including by providing data and information, technology, security and other infrastructure services. While we have implemented a supplier-risk-management program and can exert varying degrees of influence over our service providers, we do not control them, their actions, or their businesses. Despite our supplier-risk-management program, there can be no assurance that our third-party service providers will notify us of any potential risks or incidents in a timely manner or that our risk-management procedures will be effective in mitigating the impact of actions by third-party service providers on our business. Service providers have not always met our requirements and expectations, and no assurance can be provided that in the future they will perform to our standards, adequately represent our brand, comply with applicable law, appropriately manage their own risks (including cybersecurity), remain financially or operationally viable, abide by their contractual obligations, or continue to provide us with the services that we require. In such a circumstance, our ability to deliver products and services to customers, to satisfy customer expectations, and to otherwise successfully conduct our business and operations have been and, in the future, could be adversely affected. These risks are amplified to the extent that we or our third-party service providers make use of cloud computing, AI or other emerging technologies that may make our systems and those of our third-party service providers more susceptible to cyberattacks and other information technology risks, which in turn could have an adverse effect on our business and operations to the extent that they are not able to mitigate their cybersecurity or other information technology risks. In addition, we may need to incur substantial expenses to address issues of concern with a service provider, and if the issues cannot be acceptably resolved, we may not be able to timely or effectively replace the service provider due to contractual restrictions, the unavailability of acceptable alternative providers, or other reasons. Further, regardless of how much we can influence our service providers, issues of concern with them could result in supervisory actions and private litigation against us and could harm our reputation, business, and financial results. In these instances, we may be unable to enforce any indemnification or other rights we may have against such service providers.

Previous wording

As a financial-services company, we are regularly involved in pending or threatened legal proceedings and other matters and are or may be subject to potential liability in connection with them. These legal matters may be formal or informal and include litigation and arbitration with one or more identified claimants, certified or purported class actions with yet-to-be-identified claimants, and regulatory or other governmental information-gathering requests, examinations, investigations, and enforcement proceedings. Our legal matters exist in varying stages of adjudication, arbitration, negotiation, or investigation and span our business lines and operations. Claims may be based in law or equity—such as those arising under contracts or in tort and those involving banking, consumer-protection, securities, tax, employment, and other laws—and some can present novel legal theories and allege substantial or indeterminate damages. In addition, our income tax positions have been and could continue to be challenged by taxing authorities, and any adverse results could materially impact our business, results of operations, and financial condition.

Current wording

As a financial-services company, we are regularly involved in pending or threatened legal proceedings and other matters and are or may be subject to potential liability in connection with them. These legal matters may be formal or informal and include litigation and arbitration with one or more identified claimants, certified or purported class actions with yet-to-be-identified claimants, and regulatory or other governmental information-gathering requests, examinations, investigations, and enforcement proceedings. Our legal matters exist in varying stages of adjudication, arbitration, negotiation, or investigation and span our business lines and operations. Claims may be based in law or equity—such as those arising under contracts or in tort and those involving banking, consumer-protection, securities, tax, employment, and other laws—and some can present novel legal theories and allege substantial or indeterminate damages. In addition, our tax positions have been and could continue to be challenged by taxing authorities, and any adverse results could materially impact our business, results of operations, and financial condition.

Previous wording

Skilled employees are our most important resource, and competition for talented people is intense. Even though compensation and benefits expense are among our highest costs, we may not be able to locate and hire the best people, keep them with us, or properly motivate them to perform at a high level. This risk may be exacerbated due to some of our competitors having significantly greater scale, financial and operational resources, and brand recognition. While we strive to mitigate human-capital risks, our senior executives and other key leaders have deep and broad industry experience and would be difficult to replace without some degree of disruption. For example, in October 2023 our former CEO provided notice of his intent to retire, and on April 29, 2024, Michael G. Rhodes was appointed as the CEO. We may also experience competition in retaining employees based on remote or other flexible work arrangements, and our ability to attract or retain qualified employees may be adversely affected if our work arrangements are perceived as less favorable than those of our competitors. Continued scrutiny of compensation practices, especially in the financial services industry, has made this competition for talent only more difficult. In addition, many parts of our business are particularly dependent on key personnel, and retaining talented people in certain areas, has been challenging. Further, growth in our businesses, through acquisitions or otherwise, will further increase our need for skilled employees. If we were to lose and find ourselves unable to replace these personnel or other skilled employees or if the competition for talent were to drive our compensation costs to unsustainable levels, our management of operational and other risks could suffer, and our business and financial results could be negatively impacted.

Current wording

Skilled employees are our most important resource, and competition for talented people is intense. Even though compensation and benefits expense are among our highest costs, we may not be able to locate and hire the best people, keep them with us, or properly motivate them to perform at a high level. This risk may be exacerbated due to some of our competitors having significantly greater scale, financial and operational resources, and brand recognition. While we strive to mitigate human-capital risks, our senior executives and other key leaders possess deep, broad industry experience that would be difficult to replace without some disruption, making effective leadership continuity through succession planning critical. Delays in identifying, developing, or integrating successors for key roles could result in operational disruption and execution risk. We may also experience competition in retaining employees based on remote or other flexible work arrangements, and our ability to attract or retain qualified employees may be adversely affected if our work arrangements are perceived as less favorable than those of our competitors. Continued scrutiny of compensation practices, especially in the financial services industry, has made this competition for talent only more difficult. In addition, many parts of our business are particularly dependent on key personnel, and retaining talented people in certain areas, has been challenging. Further, growth in our businesses, through acquisitions or otherwise, will further increase our need for skilled employees. If we were to lose and find ourselves unable to replace these personnel or other skilled employees or if the competition for talent were to drive our compensation costs to unsustainable levels, our management of operational and other risks could suffer, and our business and financial results could be negatively impacted.

Previous wording

We have significant maturities of unsecured debt each year. While we have reduced our reliance on unsecured funding as our deposits have grown to 89% of our total liability-based funding as of December 31, 2024, it remains an important component of our capital structure and financing plans. At December 31, 2024, approximately $2.5 billion in principal amount of total outstanding consolidated unsecured debt is scheduled to mature in 2025, and approximately $149 million and $1.6 billion is scheduled to mature in 2026 and 2027, respectively. We also utilize secured funding. At December 31, 2024, approximately $2.4 billion in principal amount of total outstanding consolidated secured long-term debt is scheduled to mature in 2025, approximately $2.2 billion is scheduled to mature in 2026, and approximately $1.4 billion is scheduled to mature in 2027. Furthermore, at December 31, 2024, approximately $37.2 billion in certificates of deposit at Ally Bank are scheduled to mature in 2025, which is not included in the amounts provided above. Additional funding, whether through deposits or borrowings, will be required to fund a substantial portion of the debt maturities over these periods, and we may not be able to obtain such additional funding at interest rates or on other terms as favorable as the interest rates and other terms on the maturing debt.

Current wording

We have significant maturities of unsecured and secured debt each year. Additional funding, whether through deposits or borrowings, will be required to fund a substantial portion of the debt maturities in the upcoming years, and we may not be able to obtain such additional funding at interest rates or on other terms as favorable as the interest rates and other terms on the maturing debt.

Previous wording

Ally and Ally Bank continue to access the securitization markets. While those markets have stabilized following the liquidity crisis that commenced in 2007–2008, there can be no assurances that these sources of liquidity will remain available to us.

Current wording

Ally and Ally Bank continue to access the securitization markets. However, there can be no assurances that these sources of liquidity will remain available to us particularly during periods of financial instability.

Previous wording

We have a significant amount of indebtedness apart from deposit liabilities. At December 31, 2024, we had approximately $18.2 billion in principal amount of indebtedness outstanding (including $6.4 billion in secured indebtedness). Interest expense on our indebtedness was equal to approximately 8% of our total financing revenue and other interest income for the year ended December 31, 2024. We also have the ability to create additional indebtedness.

Current wording

We have a significant amount of indebtedness apart from deposit liabilities. At December 31, 2025, we had approximately $17.7 billion in principal amount of indebtedness outstanding (including $7.1 billion in secured indebtedness). Interest expense on our indebtedness was equal to approximately 8% of our total financing revenue and other interest income for the year ended December 31, 2025. We also have the ability to create additional indebtedness.