CHARLOTTE, N.C. — Ally Financial CEO Jeffrey Brown acknowledged that the company missed analysts’ expectations, but said the nation’s largest auto finance source feels bullish about where it’s headed. He pointed to the firm’s acquisition of an online auto lender exchange, a move he said will help Ally build a direct-to-consumer option, as well as an end-to-end digital platform.

“We’d rather just be direct and acknowledge this is a miss from analysts’ expectations, and we’ll certainly talk about the driver during the call,” he said during the company’s Oct. 26 earnings call. “But I also want to be clear that nothing we observed in the quarter meaningfully impacts our long-term plans for guidance we previously provided.

Net income fell 22% from a year ago to $209 million, or 56 cents per share. Analysts had expected earnings of 59 cents per share. Net financing revenue rose 2.7% from the prior-year period to $996 million. Auto originations fell from $11.1 billion in the year-ago period to $9.3 billion, with nonprime originations making up 11% (down from 36%) of the portfolio. The finance source also reported a decrease in its superprime business.

“As we’ve been discussing, we’re generating higher yields in the portfolio that are more than offsetting higher chargebacks and the increase in loan-loss provision. This is, again, a deliberate shift in our portfolio mix,” Brown said. “Flows we are seeing across the balance sheet remain entirely in our comfort zone.

“We believe the U.S. consumer is healthy, but overall pretty cautious and still focused on keeping debt loads in check,” he added. “We’re getting the returns to cover the higher provisions, even if we stress the book much harder going forward.”

The executive said newer retail originations has the finance source positioned for even better profitability going forward, noting that he isn’t seeing issues with skips, upticks and first payment defaults, or roll downs in delinquencies that “might drive us to reconsider our underwriting strategies.”

Ally’s auto finance business unit posted $319 million in pre-tax income, a 1.2% decline from a year ago. Total net revenue was up 8% year over year despite relatively flat earning assets due to the portfolio mix and retail auto pricing actions offsetting lease revenue declines.

“During the quarter, used-car prices for our lease book declined around 5% to 6% on a year-over-year basis, driven primarily by underperformance in certain GM cars,” said Ally CFO Chris Halmy. “As we have discussed previously, Ally had expected a 5% decline in used-vehicle prices in 2016 and 2017. And while we had some favorability in the first half of the year, we’re now seeing used-vehicle prices decline in line with our expectations.

He noted that Ally’s financial exposure has been significantly reduced, with its lease book down more than $6 billion over the last 18 months.  “Lower used-car values will continue reducing our lease revenue as we move forward, but that headwind should subside after 2017, when our lease book reaches a steady state,” Halmy noted.

Leases made up 11% of Ally’s originations in the third quarter, while used-vehicle financing accounted for 40% of originations. New-vehicle loans made up about half of the portfolio. “I think we’ve hit a little bit of a steady state,” Halmy added. “So we probably expect those used-vehicle originations to range anywhere between 40% to 50% next year.”

During the quarter, Ally added to its vehicle financing capability with the formation of an experienced transportation and equipment finance team, which will provide commercial financing to companies and municipalities for the purchase or lease of vehicles and equipment, including heavy duty trucks, trailers, busses and cargo vans.

“This is designed to provide incremental volume and diversification …,” Ally said in a statement.

The company also discussed the acquisition of California-based BlueYield, an online auto lender exchange officials said allows Ally to respond to “the growing trends for a more streamlined and digital auto financing process.”

“The auto space, just like the rest of financial services, is going more and more digital, and this acquisition will support us, delivering a digital auto financing process to serve both dealers and consumers,” said Brown. “We fully believe dealers will continue to play a central role in the purchasing and financing process, but obviously it’s important for us to establish new partnerships and technology to ensure we play a leading role.”