US Mid-cap Banks 2Q26 Review: ALLY & ZION

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US Mid-cap Banks 2Q26 Review: ALLY & ZION

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US Mid-cap Banks

2Q26 Review: ALLY & ZION

Price Objective Change

ALLY: Messaging consistent but NIM pressure unavoidable 22 July 2026

ALLY reported 2Q26 core EPS of $1.21 vs. our/consensus $1.27/1.22 estimates. Relative Equity

to us, the miss was driven by both higher credit costs (-6c) and opex (-2c), partially United States

offset higher revenue (+6c). The larger-than-expected provision expense in 2Q26 Banks

reflected a “CECL reserve build associated with asset growth,” not credit deterioration. Brandon Berman

Credit trends remained consistent. Retail auto NCO rate declined 18bp YoY to 1.57%, Research Analyst

owing to record low levels of flow to loss rates, favorable used car values, and vintage BofAS+1 646 855 3933

rollover. However, management maintained the FY26 retail auto loss guidance range brandon.berman@bofa.com

(1.8-2.0%), citing “stubbornly high” DQ rates and macro uncertainty concerns. Ebrahim H. Poonawala

Research Analyst

Management also reiterated its FY26 PPNR guidance, including expectations for 4Q26 BofAS

NIM to exceed 3.70%. (Outlook now assumes a rate hike in Sept. vs. no hikes/cuts

previously, but FY26 NIM range unaffected). That said, shares of ALLY came under

pressure on Tues. amid the implied downward revision to consensus’ 2027E. As we Acronyms:

indicated in our earnings preview, we believed consensus’ pre-earnings 4Q26 NIM

CECL: current expected credit lossestimate (+17bp in 2H26) was too aggressive. Although an elevated S-tier run-rate

methodology(trending toward low/mid-40% overtime vs. 47% in 2Q26) was a modest incremental

headwind (drove 45bp QoQ decline in 2Q26 origination yields), diminishing benefit from DQ: delinquency

deposit re-pricing is consistent with peers.