Sallie Mae (SLM) reported first-quarter 2025 earnings per share of $1.40, which outpaced the Zacks Consensus Estimate of $1.19. The bottom line increased from the prior-year quarter’s $1.27.The quarterly results were primarily aided by a rise in non-interest income, robust loan originations and lower non-interest expenses. However, higher provisions for credit losses and a fall in net interest income (NII) negatively impacted SLM’s results.The company’s GAAP net income was $305 million compared with $290 mi ...

SLM Corporation (NASDAQ:SLM) Q1 2025 Earnings Conference Call April 24, 2025 5:30 PM ET Company Participants Kate deLacy - Senior Director and Head of Investor Relations Jon Witter - Chief Executive Officer Pete Graham - Chief Financial Officer Melissa Bronaugh - Managing Vice President of Strategic Finance Conference Call Participants Jeff Adelson - Morgan Stanley Terry Ma - Barclays Moshe Orenbuch - TD Cowen Michael Kaye - Wells Fargo Nate Richam - Bank of America John Hecht - Jefferies Rick Shane - J.P. ...

Earnings Presentation 1 st Quarter 2025 1 Confidential and proprietary information. © 2025 Sallie Mae Bank. All rights reserved. CAUTIONARY NOTE AND DISCLAIMER REGARDING FORWARD-LOOKING STATEMENTS The following information is current as of April 24, 2025 (unless otherwise noted) and should be read in connection with the press release of SLM Corporation announcing its financial results for the quarter ended March 31, 2025, furnished to the Securities and Exchange Commission ("SEC") on April 24, 2025, and sub ...

Financial Performance - Sallie Mae reported GAAP diluted earnings per common share of $1.40 for Q1 2025, a 10.2% increase from $1.27 in Q1 2024[13]. - Net income for the three months ended March 31, 2025, was $304,540 thousand, an increase of 5.1% compared to $289,931 thousand for the same period in 2024[24]. - Basic earnings per common share increased to $1.43 for the first quarter of 2025, compared to $1.29 for the same period in 2024, representing an increase of 10.8%[24]. - The company expects full-year 2025 GAAP diluted earnings per common share to be in the range of $3.00 to $3.10[9]. Loan Performance - Private education loan originations grew by 7% year-over-year, totaling $655 million to $675 million for the full year 2025 guidance[9]. - The average loans outstanding in the private education loan portfolio increased to $22.9 billion, up 7% from Q1 2024[11]. - Delinquencies as a percentage of loans in repayment increased to 3.58% in Q1 2025, compared to 3.41% in Q1 2024[11]. - The total net charge-offs as a percentage of average loans in repayment decreased to 1.88% in Q1 2025, down from 2.14% in Q1 2024[11]. Income and Expenses - Total interest income for the first quarter of 2025 was $656,090 thousand, slightly down from $663,558 thousand in the same quarter of 2024, a decrease of 1.1%[24]. - Net interest income after provisions for credit losses was $351,684 thousand, down from $374,975 thousand, reflecting a decrease of 6.2% year-over-year[24]. - Total non-interest income rose to $206,044 thousand for the three months ended March 31, 2025, up from $174,158 thousand, an increase of 18.3% year-over-year[24]. - Non-interest expenses for Q1 2025 were reported at $155 million, an increase from $162 million in Q1 2024[13]. Provisions and Credit Losses - Provisions for credit losses increased to $23 million in Q1 2025, compared to $12 million in Q1 2024[11]. - The company reported provisions for credit losses of $23,286 thousand for the first quarter of 2025, compared to $12,041 thousand in the same period of 2024, indicating an increase of 93.5%[24]. Shareholder Returns - The company repurchased 1.0 million shares for $31 million in Q1 2025, with $372 million capacity remaining under the 2024 Share Repurchase Program[7][14]. - Declared dividends per common share increased to $0.13 for the first quarter of 2025, compared to $0.11 in the same period of 2024, reflecting an increase of 18.2%[24]. Balance Sheet - Total assets decreased to $28,899,184 thousand as of March 31, 2025, down from $30,072,110 thousand at December 31, 2024, representing a decline of approximately 3.9%[23]. - Total liabilities decreased to $26,498,328 thousand as of March 31, 2025, from $27,912,190 thousand at December 31, 2024, a reduction of approximately 5.1%[23]. - Deposits decreased to $20,073,168 thousand as of March 31, 2025, down from $21,068,568 thousand at December 31, 2024, a decline of approximately 4.7%[23]. Interest Margin - The net interest margin for Q1 2025 was reported at 5.27%, a decrease of 22 basis points from Q1 2024[13].

Group 1 - The Secretary of Education has been ordered to begin closing the Department of Education, a move that is controversial and opposed by approximately 60% of voters [1] - The article reflects on the implications of this executive order on the education sector and potential investment opportunities [1] Group 2 - There is a potential initiation of a long position in shares of SLM within the next 72 hours, indicating a strategic investment interest [2]

Loan Portfolio and Default Rates - Approximately 96% of the total loan portfolio in repayment is in good standing, with an annual default rate of fewer than 3%[47] - Approximately 18% or $1.31 billion of the 2024 Private Education Loan originations were for students attending for-profit schools[53] Private Education Loan Originations - The Private Education Loan originations for AY 2023-2024 are estimated at $11.5 billion, reflecting a $0.5 billion increase from AY 2022-2023[60] Higher Education Spending - Total spending on higher education is estimated at $506 billion for AY 2023-2024, up from $465 billion in AY 2019-2020[62] - Average published tuition and fees at four-year public institutions increased at a compound annual growth rate of 2.4% from AY 2020-2021 through 2024-2025[57] Company Acquisitions - The company acquired assets from Epic Research Education Services, LLC (Nitro) in 2022, enhancing digital marketing capabilities and reducing customer acquisition costs[48] - In 2023, the company completed the acquisition of key assets from Scholly, Inc., which operates a scholarship publishing and servicing platform[50] Customer Service Improvements - The company has implemented several improvements in customer service, including an integrated platform for self-service and an online chat function[51] Competition - The company competes with large banks and specialty finance companies based on products, originations capability, price, and customer service[54] Shareholder Returns - The Bank declared dividends of $570 million, $550 million, and $700 million for the years ended December 31, 2024, 2023, and 2022, respectively, primarily used to fund share repurchase programs and stock dividends[80] - The Company repurchased 11.6 million and 22.3 million shares during the years ended December 31, 2024 and 2023, respectively, with $402 million of capacity remaining under the 2024 Share Repurchase Program as of December 31, 2024[82] - The Company initiated a new policy to pay a regular quarterly cash dividend on its common stock starting in the first quarter of 2019, alongside its existing preferred stock dividends[78] - The Company has authorized a share repurchase program of up to $650 million of common stock as of January 2024, allowing flexibility in share purchases based on market conditions[81] Regulatory and Capital Requirements - The Company is subject to various regulatory capital requirements, and failure to meet minimum capital requirements could adversely affect its business and financial condition[83] - The Dodd-Frank risk retention rules require the Company to retain at least five percent of the credit risk of the assets being securitized, which it has complied with since 2016[96] Derivative Contracts and Interest Rate Risk - As of December 31, 2024, the Company had $921 million in total notional derivative contracts, with $850 million cleared on the CME and $71 million cleared on the LCH[95] - The company has a low sensitivity to interest rate changes, with an Earnings at Risk (EAR) analysis indicating a potential decrease of 8.1% under a +300 basis points shock scenario for 2024[431] - The company’s interest rate risk management program aims to achieve sustainable growth in net interest income over the long term[427] - The company’s asset liability management strategy includes using interest rate swaps and other derivatives to match assets with debt[435] - The analysis of interest rate sensitivity does not account for potential changes in credit quality or balance sheet mix, which could affect actual results[432] Funding and Financial Position - As of December 31, 2024, the company has total earning assets of $30,072.1 million and total funding of $30,072.1 million, resulting in a funding gap of $0[434] - The company’s funding includes $1.9 billion and $0.4 billion of non-interest-bearing liabilities, indicating a low overall repricing risk[434] Workforce and Community Engagement - As of December 31, 2024, the Company had approximately 1,710 team members, all located in the United States, emphasizing the importance of an engaged workforce[101] - Team members donated approximately 4,700 hours through community engagement programs in 2024[104] - The company provides a comprehensive benefits package, including contributions to 401(k) and educational assistance for team members and their dependents[102] - The company has made significant investments in learning and talent development to support team members' success[103] Community Reinvestment Act (CRA) Rating - The Company has received a CRA rating of Outstanding, indicating strong performance in meeting the credit needs of its local community[90]

Core Viewpoint - Sallie Mae's stock has surged due to expectations of privatization of federal education loans under the Trump administration, alongside favorable conditions from recent Federal Reserve interest rate cuts [2][6]. Stock Performance - Sallie Mae's stock reached a 52-week high of $32.65, closing at $32.53, with a 68% increase over the past year, outperforming peers like Ally Financial Inc. and Navient Corporation [1][3]. Financial Outlook - The Federal Reserve's interest rate cuts are expected to stabilize funding costs, which will benefit Sallie Mae and its peers, leading to anticipated growth in net interest income (NII) [6][7]. - Sallie Mae's NII has experienced a negative compound annual growth rate (CAGR) of 1.8% over the last six years, but improved funding conditions are expected to support NII expansion [8]. Business Growth Initiatives - Sallie Mae is enhancing its private student loan business, with a 10% increase in private education loan originations in 2024 compared to 2023, and expects 6-8% growth in 2025 [9]. - The company is expanding operations through acquisitions, including the purchase of Scholly and Nitro College, which enhance its digital marketing capabilities and outreach [10][11]. Return on Equity - Sallie Mae's trailing 12-month return on equity (ROE) stands at 31.66%, significantly higher than the industry average of 13.06%, indicating effective utilization of shareholders' funds [12]. Expense and Debt Concerns - The company faces rising expenses, with non-interest expenses growing at a CAGR of 1.9% over the past six years, which may hinder bottom-line growth [13]. - As of December 31, 2024, Sallie Mae had long-term borrowings of $6.4 billion against cash and cash equivalents of $4.7 billion, indicating a higher debt level relative to liquidity [14]. Investment Considerations - Sallie Mae's focus on expanding its product offerings and improving its private student loan business is likely to support financial performance, but elevated expenses and high debt levels are concerns [15][19].

Core Viewpoint - Sallie Mae (SLM) reported mixed financial results for the fourth quarter of 2024, with earnings per share (EPS) of 50 cents, missing the consensus estimate of 54 cents, and a decline from 72 cents in the prior-year quarter [1][2][10] Financial Performance - The company's GAAP net income for the fourth quarter was $112 million, down from $168 million in the prior-year quarter [2] - For the full year 2024, EPS was $2.68, missing the consensus estimate of $2.72 but increasing from $2.41 in 2023 [3] - Net income for 2024 was reported at $608 million, reflecting a 46.8% increase from the prior year [3] Net Interest Income and Expenses - Fourth-quarter net interest income (NII) totaled $362 million, up 0.8% year over year, but missed the consensus estimate by 2.5% [4] - The quarterly net interest margin was 4.9%, down 45 basis points from the prior-year quarter [4] - Non-interest income was $28 million, representing a 16.7% year-over-year increase [4] - Non-interest expenses rose 12.8% year over year to $150 million [5] Credit Quality - Provision for credit losses was $108 million, significantly up from $16 million in the prior-year quarter [6] - Net charge-offs for private education loans were $93 million, showing a slight year-over-year increase [6] - The percentage of private education loans held for investment net charge-offs was 2.38%, contracting 5 basis points year over year [6] Balance Sheet Position - As of December 31, 2024, deposits were $21.1 billion, down 1.7% sequentially [7] - Private education loans held for investment were $20.9 billion, showing a marginal increase from the prior year [7] - Private education loan originations increased by 10% from the year-ago quarter [7] Share Repurchase - In the fourth quarter, SLM repurchased 11.6 million shares for $250 million under its 2024 share buyback program [8] 2025 Outlook - The company expects diluted EPS to be in the range of $3-$3.10 for 2025 [9] - Anticipated total loan portfolio net charge-offs as a percentage of average loans in repayment is projected to be between 2-2.2% [9] - Private education loan originations are expected to grow by 6-8% year over year [9] - Non-interest expenses are expected to be in the range of $655-$675 million [9] Final Thoughts - Overall financial performance appears decent, with robust loan origination, an increase in NII, and lower provisions for credit loss being positive factors [10]

Earnings Presentation 4 th Quarter & Full-Year 2024 Confidential and proprietary information. © 2024 Sallie Mae Bank. All rights reserved. 1 CAUTIONARY NOTE AND DISCLAIMER REGARDING FORWARD LOOKING STATEMENTS The following information is current as of January 23, 2025 (unless otherwise noted) and should be read in connection with the press release of SLM Corporation announcing its financial results for the quarter and year ended December 31, 2024, furnished to the Securities and Exchange Commission ("SEC") ...

Financial Data and Key Metrics Changes - The company reported its fourth quarter and full year 2024 earnings, indicating a focus on financial performance and operational results [2][3] - Specific financial metrics and results will be discussed in detail during the call, highlighting the company's financial conditions and cash flows [4][5] Business Line Data and Key Metrics Changes - Detailed performance across various business lines will be provided, showcasing how each segment contributed to overall results [4] Market Data and Key Metrics Changes - The company will address market conditions and how external factors have influenced its operations and financial performance [5] Company Strategy and Development Direction - The management will outline the strategic direction of the company, including growth initiatives and competitive positioning within the industry [4] Management Comments on Operating Environment and Future Outlook - Management will provide insights into the current operating environment and expectations for future performance, emphasizing potential risks and opportunities [5] Other Important Information - The call will include forward-looking statements, with a reminder that actual results may differ due to various factors affecting the business [4][5] Q&A Session Summary Question: What are the expectations for future growth? - Management will address inquiries regarding growth projections and strategic initiatives aimed at enhancing performance [4] Question: How is the company responding to market challenges? - The response will include strategies implemented to navigate current market conditions and maintain competitiveness [5]