We're going to get started. Just give me one second. All right. Next, we're excited to have Ally Financial joining us once again. They've continued to execute on their strategy of being a leading direct bank and the premier auto lender in the market, and has positioned itself to generate and sustain mid-teens returns through an improving margin, lower credit losses, and continued cost discipline, amongst other things. Joining us for the second time to tell us how the momentum is going to continue is CEO Michael Rhodes. Today's presentation is going to be a fireside chat. Welcome, Michael. Thanks for coming back.
Great to be here, Ryan. Thanks.
So, you know, maybe to kick it off, you had an announcement out this morning.
We saw that.
Buyback authorization. You know, people have been eagerly anticipating this. Maybe just frame to us, one, how we got here, how you're thinking about the $2 billion of authorization in terms of the pace and magnitude of buybacks going forward.
Absolutely, Ryan. Well, thanks and thanks for the opportunity to get up here and tell our story. I'll start with how we got here, and it's actually a really good and compelling story, and I think a testament to the power of the franchise that we have. I think, Ryan, you know, and many folks know that we actually had some strategic pivots earlier this year with this narrative about the power of focus, where we've taken our franchise, really focused on the core businesses, where we've defined competitive advantages, relevant scale, and a clear reason to win, and so we came with this power of focus strategy that have executed very well, and that's created some real momentum.
And so I think what the momentum for this year, which is basically enabling the buyback that we announced earlier, is our adjusted earnings are up, give or take, 60% on a year-over-year basis so far. We've gotten there by keeping expenses flat. Revenue has been expanding. Credit losses have been going down. And so that's clearly a very nice dynamic. You add to that the capital builds that we have, and there's just a strength of the core franchises. And that just puts us in a really, really nice spot. And so I view the buyback announcement today as really a testament, as a clear testament to the momentum we have, but probably just as important as confidence and conviction in terms of our path on a go-forward basis. Now, $2 billion, it's obviously a big number. And how do we think about that? Look, it's open-ended.
Look, we want the flexibility in terms of how we actually think about this. We are going to go slow. You've heard us say that, and we'll kind of ramp up over time. And as we think about capital, as you can imagine, we have aspirations to grow the balance sheet. We're going to support balance sheet growth. We'll support the dividends. We're also going to create capital as we're going along. But we have some residual capital after that to do the buyback. Hence the reason we're doing that. And, Ryan, the other thing I'll mention is if you look at returns on capital, and last year we were at times in the single digits, mid-single digits. Last quarter, we were called a 12% return on capital, which is great. But our trajectory, we believe, is higher than that.
And so don't view this announcement as us declaring victory, spiking the football. We still have work to do. But we've got a lot of conviction on the path.
As a Giants fan, I'm not spiking any football. But your response makes total sense. I appreciate the color. So over the past 12-18 months, you talked about in your first answer, you've taken significant steps to create a more focused organization. Can you discuss how this strategic shift has impacted your competitive positioning and why you believe simplifying the organization was the right move for Ally over the longer term?
A great question, and we have taken some deliberate steps, and when I think about the strategy and the steps we've taken, this real simple framework I think about is let's be clear about where we compete and how we win, and so where we compete, one of the things that I talk about all the time is we compete in places where we have relevant scale. At the end of the day, the size of the bank doesn't really matter. It's the size of the business that you're running, and so in the place where we have relevant scale, Dealer Financial Services, we're the largest bank auto lender, and so that's relevant scale. If I think about our depository franchise, we're the largest direct bank, and so again, that's relevant scale. We have a Corporate Finance business where the notion of relevant scale is actually less.
And so we're actually at relevant scale in terms of what we do there, albeit it's a smaller business. And so we're really putting our energy and effort in those places. And why does relevant scale matter? Well, my operating cost, my unit cost to do something, to process a widget, to service a loan, to bring on a new loan, when we have scale, we get those scale economies. We get the advantages from that. And then when I need to make a technology investment, I basically get to amortize that against a scale that's as good or better than anyone else's for that business. And so that's why we have such passion and conviction that we're going to double down on the things that we're really, really good at. And then we execute well. You get the results that you actually see.
And so that's what we talk about, where we compete. Actually, the only thing I'll add with where we compete is relevant scale plus, I often talk about this notion of adjacencies. So let's take Dealer Financial Services. We have relationships with 22,000 dealers. We're the largest bank-owned auto finance franchise in the U.S. We have a complete suite of solutions. We have insurance. We have pass-through programs. We have SmartAuction. We'll wait for the dealer community to kind of move inventory back and forth. So we actually leverage our relationships. And we actually do that in a way to bring even more value to our partners. And so it's just basically a flywheel effect that really works. And the consumer bank, we have adjacencies. Look, we have basically checking accounts or spending accounts, we call them. We have the savings accounts.
We also have the adjacency through the Invest platform, and so relevant scale adjacencies, that's how we're going to win, and that's the playbook, and if I think about this year and the pivots we've taken, look, we've made very deliberate choices this year. This isn't an accident. We've actually exited, actually before I came, we exited a lending business, but then in the past year, we've gone pencils down on mortgage originations, and we've actually stopped, and we sold our credit card business. We actually repositioned our securities portfolio, and we've taken a lot of very disciplined steps to make sure we're managing expenses very, very carefully, and so when you take this and you couple good strategic intent with strong execution, basically good things happen, and I could probably talk on this forever. I know we only have a few minutes.
But the other element I talk about, the competitive positioning and why it really matters, is when I talk about the power of focus, and I talk about the power of focus all the time. And really, if you look at all great businesses that you've seen these great successes, it's been anchored in this notion of focus. Focus does not mean lack of ambition. In fact, quite the opposite. In large complex organizations, bureaucracy and muddled priorities and confusion about what the commander's intent really is kind of take over. And that lack of focus actually leads to a lot of times mediocrity. And so the fact that we are focused and don't have those kind of ailments that sometimes impact some larger institutions, I think it just puts us competitively in a really, really strong position. And that's how I think about it.
So no, super helpful. And as we approach year-end, it's clear Ally's generated significant momentum over the course of the year. You talked about returns improving. Can you maybe just discuss your top priorities as we head into 2026? And high level, how do you feel the business is positioned as we head into 2026?
So, top priorities, as you can imagine, double down on the things that we're actually really good at. So, Dealer Financial Services, if I think about this year and what we've been able to accomplish, this year, it's a competitive marketplace. But if you look at our new account or our new lending origination, it's up about 14% on a year-over-year basis. And margins have been holding strong. So we feel actually very good about that. And again, I think the strength of the relationships that our team has in Dealer Financial Services has become so, so powerful. And so we're actually leveraging that team. We're actually investing in the team. And we're investing in the technology to enable ourselves to serve our dealer customers better, but also to serve our customers in a better, more effective way.
It's around technology and people, the type of investments that we're making in 2026 and beyond, to really double down on what's just such a core, core strength of ours. I feel like the businesses are less correlated to our retail auto lending. Think about the fee-based products, insurance and SmartAuction, our pass-through programs. I'd also put in the non-correlated bucket, what we do in our Corporate Finance business. If you look at those fee-based products plus Corporate Finance, it's about $2.6 billion of revenue. For us, it's give or take about a third of our revenue. That number's up 40% since pre-COVID. You see these non-correlated businesses that are actually doing well and they're growing and have very attractive returns on capital, as you can imagine.
And then, on top of that, if you look at what we're doing in our depository business and the margin expansion that we've actually seen in that business, again, a non-correlated business with the auto franchise, it just feels that we've positioned ourselves in a very nice way, exiting 2025 into 2026. And again, with the share repurchase, it's all about confidence. And that's how I think about it.
So you talked a little bit about Dealer Financial Services. Year to date, we've seen competition pick up in the auto market. But you've continued to deliver incredibly strong volume. I think you just referenced it before. Maybe just talk about what you're seeing in the market. How are you competing? And what gives you the confidence in your ability to continue to drive both volume and risk-adjusted returns that you're targeting?
So as I said, we're actually really pleased with what we're seeing, and look, there is competition in the marketplace, and in a way, we see the competition in the marketplace as a real testament to what a great asset class it is, because I think other folks in the market are actually seeing that this is a nice place to be, so as competition's intensified, you've actually looked at our volumes. We're actually up on a year-over-year basis. We like our margins, and so why? and I keep on going back to relationships, these long-standing relationships that we have, and we have this, we have teams of people across the country who are dealing with our dealer partners every single day, and we've been doing that through the cycle, and so a lot of folks come and go in this.
But I also appreciate our dealer partners recognize that we're the ones who are there through the cycle. Earlier this year, I had the chance to chat at the National Automobile Dealers Association convention down in New Orleans, and it was just after we announced our focused approach, and our focused approach was about selling the card business and going pencils down on mortgage. We talked to the dealer community. The enthusiasm for the dealer community was off the charts because they saw we are in it for them. It's unambiguous. We are in it to help them win, and we're only successful if our partners are successful, and that just creates a huge differentiation, and we have 100+ years in this business, lots of cycles, and a complete set of capabilities to support our dealers, and we feel really good about that. You talk about competition.
You don't even look at light vehicle sales and what's kind of going on with them. It's a little softness in the fourth quarter. We still expect to see volumes up on a year-over-year basis. Again, being a full-spectrum lender, the top of the funnel activity, we're seeing more application flow this year for the first three quarters than we've ever seen. The fourth quarter of this year, we expect this to be the best fourth quarter for application flow. As the machine is working, I would love to take credit for all this. I can't. It's the team that's making this happen.
Got it. No, that makes total sense. Maybe you referenced earlier deposits. Ally Bank has, I think, over $140 billion in retail deposits. Talk about how the strategy has evolved, particularly since you've taken over in terms of customer targets, and what are you doing to grow or optimize the franchise at this point?
A great question. And look, I had the great fortune of coming into an organization that had built a fabulous deposits franchise. I mean, we're more than about 90% funded by deposits, 92% FDIC insured. This deposit franchise is incredible. I just want to say that. And so what makes that such? Well, again, I'd love to take all the credit for it, but I can't because this was built well before I showed up. And we're in the part of the market where consumer behaviors and preferences are going in that we're digital. It's more and more customers are seeking digital solutions for their banking needs. And we were very, very early in that game. And as a result, we built the capabilities and the customer experience that really resonate with consumers in a digital world.
Coupled with that, if you think about the digital world, so how do you actually attract customers? Because there is no physical storefront that you can actually go into or not in the communities in the way that many, many banks are. And so the virtual storefront, if you will, is our brand. And so look, we may not have the biggest brand in the marketplace in terms of the dollar spend. But in terms of the impact that we create, it's really, really significant. Our awareness levels, we definitely punch above our weight. Our consideration, our reputation for trust is just really off the charts. And again, the power of the brand really, really matters because it builds consideration. And when you build that consideration, people come to our site. And we actually kind of pull them through the funnel.
And it actually helps create the goodness on a go-forward basis. And so we really like what we're seeing in the deposit business. And this is one where, again, we've been investing in capabilities and experience in a way where, look, price is still important, without a doubt. The rate we offer is important. We're very low-fee, close to no-fee, but we're a very low-fee proposition. But it's not all about rate. And you've actually seen our pricing reflect that. And so I feel very good about where we're positioned. At this moment, we don't have a need to really grow dynamically our deposit business. But you actually see us keep on growing our customer count. And so our typical new customers probably lower balances than our historic customer.
But those lower balances are deeper engaged, more primacy, the way I kind of think about it, and honestly a bit less rate sensitive. And so we really like the mix dynamics that are going on inside the deposit book.
So maybe just to round out the core franchises, let's spend a minute on Corporate Finance. You've been posting strong returns the last couple of years. And as you articulated, it doesn't have a huge amount of overlap with the other businesses. Maybe just talk about what's your strategic view for its future? How does it fit in with the other businesses? And how do you see this complementing the broader balance sheet over the next few years?
Great question, Ryan. And as you talk about strong returns the past couple of years, I'd actually edit that to say this is creating strong returns for 25 years. In fact, our time as a publicly traded company, you actually see this business has had a 20%+ return on capital the entire time. And so you look at this business, let's talk about, first of all, the connectivity to the rest of the organization and why it's so important for us on a go-forward basis. First of all, this is a business where relationship matters. And in many ways, the way we deal with our dealer community, it's really around the philosophy of actually how we deal with partners. And that philosophy is common between the dealers and certainly Corporate Finance, which is we're there through the cycle. We're there to figure out solutions to complex financing needs.
And it's very much a relationship-based business. A lot of our business, like I say, a substantial majority is repeat business with clients who we've been dealing with not just for years, but in some cases, decades. And so again, relationship really, really matters there. I'd also offer the fact that we have a depository franchise, which is, again, 92% FDIC insured. And the size that it is gives us access to very low-cost and stable deposits. And because of that, we're actually able to go and really pursue deals that actually are a little bit lower risk because we actually have the depository base in order to support that. And in terms of strategy, you also do think about the strategy of the organization, the balance sheet, and what our balance sheet income statement looks like.
We actually like the diversity of this, again, non-correlated asset on our balance sheet. And we have the confidence in the team and what they can actually accomplish. That's really good. Plus, we actually like the fee income that goes with that. And so again, I feel really great about this business. And Ryan, maybe one other thing. And again, I could talk for a long time about Corporate Finance. What do you need in order to be successful in this? At the end of the day, you need a great team. And we have a team with 25-plus years of experience working together through cycles, battle-tested, and ups and downs. You want a team that has a credit-first mindset in terms of the risk that we take, how we underwrite, how we structure our transactions. You want a team that has a one-deal-at-a-time mindset.
And so they're not going chasing transactions, actually looking at every single deal. We agent virtually everything that we do, which is, again, a great place to be. We do our own diligence. And I just have to say, we work with some top, top-notch sponsors who, again, have been great investors and through the cycle. And so you pull all that together, this is the business we want to invest in.
Maybe just a quick follow-up to that. Obviously, middle-market lending has been increasingly competitive. What do you see as the unique strength, and what steps are you taking to ensure that these returns you've seen over the 25 years can be preserved?
Yeah. No, again, it's really about the team and the relationships with the sponsors and kind of being there through the cycle, one deal at a time, long-standing sponsors. Since we've been a public company, this business has had, call it, roughly 25 basis point loss rate and just very strong returns, and just as our Dealer Financial Services is part of the secret sauce, it's these long-standing relationships. We have long-standing relationships. We don't go chase every single deal. We actually have some spaces where we feel very good at, some verticals where we know the sponsors, we know the business, and we stick to what we do, and we do it well, and that's why we have confidence in it.
So let's maybe shift gears and talk about returns. You've expressed confidence in recent times about achieving your mid-teens return target. I think it implies over $6 EPS. What factors give you greater conviction today, maybe versus a year ago, especially given the ongoing uncertainty in the operating environment?
Okay, so a lot to the question there. The operating environment is interesting. We can talk about that. All that being the case, there's stronger conviction today than a year ago, and here's why. A year ago, actually, I was here. We talked about the three things that need to be true.
At the same time.
At the same time, three things that need to be true to hit mid-teens returns. One is net interest margin had to progress to the upper threes range. Two is we need to get credit losses, particularly on the auto side, at 2% or lower, and three, we need to show discipline in terms of how we manage expense and capital, so let me walk from the bottom of that to the top. In terms of the expenses, I think you've actually seen, in controllable expenses, we've been very disciplined about how we're actually spending our money, and I can tell you, just expect that discipline to continue, and so I'd say we tick the box on that one. In terms of the credit losses, we started out with a wide range of guide for credit losses.
In the third quarter, we guided to the bottom end of the range, which is basically a 2% credit loss. When you look at the trends that we're seeing, the rollover of the vintages, the servicing enhancements that we've seen, we've pretty much accomplished that, and so two of the three so far I'm check, check in terms of what we've accomplished. The third is NIM. Now, NIM, roughly 20 basis points up on a year-over-year basis. Taking into account we actually sold the credit card business, which is very NIM-rich, which lives out with 20 basis points of NIM, so we're basically up organically like 40 basis points, give or take, of NIM, and so again, we're not where we need to go, but we're very much on the path. We've said a number of times the path to higher NIM is not linear.
Depending on how the Fed moves, we're asset-sensitive in the near term, liability-sensitive in the medium term. So there can be ups and downs, but the direction of travel is very, very clear. And so of the things that we need to do to generate mid-teens returns, in my mind, we've basically done two of them. And the third, we're well along the way.
So maybe digging a little bit further on some of those building blocks you laid out, starting with the last one, the margin. As you said, Ally's obviously gone from a high twos NIM to on a trajectory to a high threes NIM. Talk about the changes driving this. What are your expectations in the near term? And just what are you doing to sustain that type of margin?
That's a great question, Ryan. You can imagine, I've been at my job a year and a half. I think this might have been my day one question when I met with the finance team. I said, "How do we understand this math here?" and have a lot of passion and conviction in where we are, and it's grounded in a few simple observations. First of all, the power on NIM is both sides of the balance sheet, both assets and liabilities. I'll talk with them both. On the asset side, we have two things going on simultaneously. One, we have some low-rate securities and mortgages which are running off, and we're replacing those with much higher rate, higher margin, auto loans and Corporate Finance loans. So that dynamic is very accretive to NIM on an ongoing basis. That dynamic continues.
Second is our mix of auto lending has actually shifted, and we've actually more at the intersection called prime and used than we were back in, say, 2019, so then again, that's a credit to NIM, so the assets just have some natural tailwinds which are pushing NIM up. On the liability side, the story is equally as powerful, if not more so, and so if you compare 2019 to today, in 2019, we were about 75% deposit funded. Today, we're about 90% deposit funded. If you look at our deposit pricing relative to Fed funds, we're 65 points better, and so if you take the 65-point better plus that mix shift, if you look at the total mix of how we actually fund our business, we're actually about 100 basis points better in terms of how our funding profile versus 2019.
And so I take, call it, give or take 100 basis points of benefit on the liability side plus the rollover on the asset side. That is the direction of higher NIM.
Gotcha. It continues to be a lot of focus on the health of the consumer, particularly the low end. How would you characterize what you're seeing? Are there any notable shifts in behavior that you're observing within your portfolio?
Yeah. No, absolutely. And I'll talk a bit about our portfolio. And I'll talk about the environment as well. First of all, in our portfolio, I have to use this as one talking point that's fairly important, is in this environment that we're entering into, this time last year, we actually had a near prime credit card business that we don't have today. And so we've actually taken a lot of inherent consumer credit risk off the balance sheet. Now, on the auto side, where is the stress? The stress is clearly in the subprime business. Now, with subprime, there are a couple of things with that. One, our mix of subprime is relatively low. We're calling it 10% subprime, probably 2% deep subprime. Second is, really a couple of years ago, we actually reset expectations in terms of how we thought this business would perform.
And again, one of the benefits of being in the business through all cycles is you get really good data sets to inform your decisions. Folks coming in now, they don't really have that luxury. And for our reset expectations, we're actually performing just about how we expected. And so there basically have been no surprises. And then we've taken this a lot of actions in general in terms of our underwriting approach, our S-tier mix, our servicing approach, and kind of how we actually do that. We engage with our customers, the channels, the offers, the timing, all of that good stuff. And so that's actually teeing us up well.
Look, we are in this interesting situation where if I look at our data and how we're performing and I compare that to consumer confidence and kind of what I see in the headlines, there's a bit of an incongruity. To be fair, I think I read the notes from these conferences. I think other folks are seeing the same thing. But we're feeling good about how our customers are behaving. I recognize there's some uncertainty in the environment. We're probably being a little on the cautious side in this environment. And we're not being cautious because we see anything in our own data. We're just being cautious because the environment feels a bit uncertain.
Gotcha. No, that makes total sense. So you talked before you began the year with a wide range of expectations on credit losses. And you've sort of honed it in. And you've seen a lot of improvement here, particularly in the flow to loss. And I think a lot of that's been driven by the actions you've taken across the company to improve servicing. I'm sure we'll get formal guidance. I see Russ sitting there in early 2026. But maybe just talk about the main drivers of credit performance as you look into 2026.
So the main drivers of credit performance, we've talked about this before. I think there are three primary drivers. And we feel good about all three. One is delinquency trends, which are informed partially by the vintage dynamics. The 2022 vintage, which was a little hotter, is running off. It's, I think, roughly 10% or above today and being replaced by vintages which are actually performing better. So the vintage dynamics are a positive going into 2026. Second is the flow to loss trends. If something becomes delinquent, how's it flow to loss? And again, I just can't say enough about the team that we have that does our collections work and how effective we are at serving customers in times of need and making sure that we're there with the right offer, right product, the right time in order to collect the loans in an effective and empathetic way.
And so those servicing improvements, you see those continue. And then there's used car values, which is given a default, what happens. And used car values have been strong. And they've been holding. And there are a lot of factors that go into that. It's the affordability of new vehicles that comes into play. The fewer cars that were produced or vehicles that were produced during COVID because of supply chain disruption, you can't create new used cars. And just the overall consumer demand. And so we feel vehicle values are fairly constructive. And so you take all this. And again, we think we're positioned well going into 2026. Appreciate there's some macro factors. And we're not immune to the macro. But we feel, well, how we're positioned.
Gotcha. No, that's helpful. So about three years ago, you began tightening underwriting. It's somewhat hard to see now because you've had such robust originations. But the amount of S-tier that you do, which is your highest quality, still remains in the 40s. I think years ago, it was in the low 30s. Maybe just talk about what you're watching decide when it makes sense to begin to unwind these furthers. And over what time frame can we see this happen?
No, look, that's a great question. And as you can imagine, we look at a lot of data: internal data, external data, macro data. We take our own portfolio and we segment it and micro-segment it in various ways. And generally, there is no bright line. And the beauty of our business is, again, when you have a rich data set and you can actually cut it and slice it in various ways. We've got a reasonably real-time view into how our portfolio is performing and see segments where there may be more stress. We can pull back on those. Alternatively, we see segments where actually the risk-reward ratio looks pretty good. And again, being in the cycle consistently enables you to have that data to make very informed decisions on how you're going to react.
And so no bright line on curtailment or lack of curtailment, but continuous adjustments as we go along.
A couple more questions as we round out here, Michael. So you touched on the share buyback authorization at the onset. How are we more broadly thinking about capital allocation priorities over the longer term? And how are you balancing returning capital to shareholders while also making decisions to invest in the business?
Well, I mean, clearly, capital allocations, the first and best use of capital is going to be to grow our balance sheet and grow our business, and we'll do so in a very disciplined way. We're not going to grow for the sake of growth. We're going to grow in places where we think the returns are attractive, and so that's really number one, and then we have dividends we're going to pay. We're still on the path of accreting capital, but our viewpoint is the capital generation we're going to create is going to have some remaining capital for the opportunity for buyback as well, but look, we look to grow the business, and if you look at our performance this year, our balance sheet, I know on average, the balance sheet is not showing growth this year, but we're growing the places we want to.
and we're growing the places with attractive returns and with higher margins. We're actually running off the stuff that has lower returns and lower margins. This is what we want us to do. This is what I think our investors want us to do.
So shares continue to trade at a discount, maybe not as much after today, to what we'd expect for a company that is going to generate mid-teens returns on a sustainable basis. Maybe just talk, Michael, about as you go around and speak with investors, what are some of the misperceptions that are out there? And what do you think the market is still missing about the overall story or the company?
To be fair, I'm not sure the market's missing much. We've told the story and what the path is to mid-teens returns. We've been stacking up consecutive quarters, which are demonstrating we're on the path. My sense is we continue to deliver and continue to perform and continue to do what we say we're going to do. There's a valuation we'll follow, and the markets will price us in a way that reflects how they think about the business, and the best thing this management team can do is continue to drive strong returns to give that confidence.
No, that makes total sense. We spent a lot of time upfront talking about the simplification and focus of the organization. So I'm fairly confident that M&A is not part of the strategy at this point. But I'm wondering, assuming that there's no expectation, what are the things you could look to do to add to the franchise to enhance your strategic positioning, if there's any of them?
Oh, look, first of all, M&A. We spend no time thinking about M&A. I can tell you that. If I think about our franchise, the businesses that we're in are all very large addressable markets and also very fragmented. Look at the auto business. We're the largest. We're like 6% share or whatever it is of origination. Very large, multi-hundred-billion-dollar marketplace, fragmented. Corporate Finance, very large, fragmented, growing market. And our deposits business, we're in the part of the space which is growing in a very, very large addressable market. And so we really feel no need to go bolt-on new things here or there. We love the markets we're in. We like the adjacencies relative to the marketplaces. And for the next several years, we just see just keep on doing what we do really well, do more of it.
The volume growth and the returns will follow.
I guess before we run out of time here, you did give some guidance on the fourth quarter, stable margin, losses of around 2% for the full year, average earning assets on a year-on-year basis to end relatively flat on a year-end-of-period basis. I guess now that we're two months into 4Q, any thoughts on either how the fourth quarter is progressing versus expectations or anything in particular in the last minute or so that you wanted to highlight?
Sure. No, thanks, Ryan, and in terms of fourth quarter, I've used the word discipline a lot. We feel very good about stacking up the discipline of consecutive strong performing quarters. In terms of full-year guidance, just no change. Full year is what it is. We don't give quarterly guidance. I think you know that being the case. If you take our full-year guidance and three quarters is over, you can kind of get a sense of what the fourth quarter may be, and so a couple of areas that people pay a lot of attention to, NIM and then NCO. On the NIM side, like we've said, we're going to be in the upper end of the range, upper half of the range. We continue to believe so. We've also said a number of times we're asset-sensitive in the near term and liability-sensitive in the long term.
With the way the Fed is moving, likely move again today, there could be a little bit of pressure on them in the quarter. But that doesn't impact anything, maybe a couple of points. It doesn't impact anything in terms of long-term destinations because the betas will catch up. And we've just got a lot of confidence in that. On the flip side, credit losses, we guide to 2%, give or take. I think Russ in the call said he bet the under. Two months in, I continue to bet the under. And in fact, I won't be surprised if we're a couple of basis points to the good on that. And so you net those two things out. The quarter looks like we think the quarter is going to behave. A couple of geography changes. But we feel very good about the quarter shaping out.
So it sounds like it's going to be really strong into the year. So please join me in thanking Michael for his presentation.
All right. Thank you.