SLM Corporation (NASDAQ:SLM) Q4 2021 Earnings Conference Call January 27, 2022 8:00 AM ET Company Participants Brian Cronin – Vice President-Investor Relations Jon Witter – Chief Executive Officer Steve McGarry – Chief Financial Officer Conference Call Participants Sanjay Sakhrani – KBW Michael Kaye – Wells Fargo Securities Mark DeVries – Barclays Moshe Orenbuch – Credit Suisse Matthew Hewitt – Jefferies Operator Good day, and welcome to the 2021 Fourth Quarter Sallie Mae Conference Call. At this time all p ...

Financial Data and Key Metrics Changes - GAAP diluted EPS for Q3 2021 was $0.24, down from $0.45 in the same quarter last year, primarily due to a substantial provision release last year as the economic outlook improved [6][7] - Total loan loss provision was $138 million for Q3 2021, driven mainly by new loan commitments and changes to forbearance practices [10][16] - The private education loan reserve was $1.3 billion, representing 5.2% of total student loan exposure, down from 7.2% a year ago [14] Business Line Data and Key Metrics Changes - Private education loan originations for Q3 2021 were $2.1 billion, an increase of $192 million or 10.1% compared to Q3 2020, although below original expectations [7][24] - Loans less than $5,000 were down 19% year-to-date compared to the same point last year, indicating a shift in demand due to federal stimulus and HEERF funding [8][9] - The cosigner rate for Q3 2021 was 88%, consistent with the previous year, while the average FICO score was 749, slightly down from 752 [9] Market Data and Key Metrics Changes - The total number of student loans, including federal and private, fell 4% in the first half of 2021 compared to the same period in 2020, indicating a challenging market environment [9] - The private student loan market is estimated to have grown in the low- to mid-single digits, suggesting that the company's 10% growth likely resulted in market share gains [9] Company Strategy and Development Direction - The company is committed to a capital return strategy, with an expected mix of approximately 20% dividends and 80% share repurchases over the next several years [11][12] - A preliminary agreement for a $1 billion loan sale was reached, with terms exceeding those of the first quarter sale, indicating strong market conditions [12][13] - The company plans to maintain a flat balance sheet while aggressively buying back stock as long as valuation arbitrage exists [36][52] Management Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating inflationary pressures and highlighted ongoing efficiency efforts [21] - The political environment is viewed as constructive, with support for Pell Grants and HBCUs, although the impact on the company's business is limited [22][32] - The company raised its diluted core earnings per share guidance for the year to a range of $3.55 to $3.60, reflecting improved economic outlook and lower provisions for credit losses [23][24] Other Important Information - Operating expenses for Q3 2021 were $141 million, up from $128 million in the prior quarter, but flat year-over-year when excluding certain timing differences [19] - The net interest margin on interest-earning assets was 5.03% in Q3, an increase from both the prior quarter and the year-ago quarter [18] Q&A Session Summary Question: How will the end of government aid and trends in foreign and out-of-state students affect next year's season? - Management anticipates the impact of HEERF funding will subside during the current academic year, but sees no significant changes in trends for out-of-state and foreign students [29][30] Question: What are the plans for loan sales versus balance sheet growth in 2022? - The company plans to maintain a flat balance sheet and use proceeds from loan sales to buy back stock, with no specific plans for 2022 yet [35][36] Question: How does the company view the ability to take advantage of market conditions for loan sales? - Management believes the limitation is more about how quickly capital can be deployed rather than the amount of loan sales [39] Question: What is the outlook for provisions and reserves going forward? - The reserve for the loan portfolio is expected to hover around 5.2%, with lower provisions in quarters without new commitments [60] Question: How will the company manage in a rising rate environment? - The company is well-positioned for a rising rate environment, with 55% of its portfolio being variable rate loans, which will continue to generate strong returns [62]

Financial Data and Key Metrics Changes - GAAP EPS for Q2 2021 was $0.44, a significant improvement from a loss of $0.23 in the same quarter last year, driven by strong business performance and an improved economic outlook [6][18] - Private education loan originations reached $533 million, up $36 million or 7% compared to Q2 2020, with a market share increase to 56%, an 8% rise from Q1 2020 [6][18] - Annualized net charge-offs for private education loans were 1.16%, down from 1.29% in Q1 2021, indicating improved credit performance [7][14] Business Line Data and Key Metrics Changes - The private education loan reserve stood at $1.2 billion, representing 5% of total student loan exposure, unchanged from the previous quarter but down from 7.5% a year ago [10] - Delinquent loans (30+ days) were 2.1%, flat compared to Q1 2021 and down from the previous year, while loans in forbearance improved to 3% from 9.3% a year ago [13][14] Market Data and Key Metrics Changes - The average college graduate unemployment rate was 3.3% in Q2 2021, down from 3.8% in Q1 2021, indicating a positive trend in employment for graduates [18] - The company noted that 85% of reported schools are returning to a normal residential model, which is expected to positively impact student attendance [18] Company Strategy and Development Direction - The company is focused on executing its 2021 capital return program and plans to continue share repurchases while selling loans to manage capital effectively [8][21] - The management emphasized a disciplined approach to capital allocation, with a potential shift towards dividends as stock prices increase [25][27] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the reopening strategies of schools and the positive economic environment, which is expected to support loan servicing capabilities [17][18] - The company raised its GAAP diluted earnings per share guidance for 2021 to a range of $3.15 to $3.25, reflecting strong credit performance and a reduction in expected loan charge-offs [21][22] Other Important Information - The company is introducing new tools to assist families in completing financial aid applications and enhancing scholarship search capabilities, aiming to broaden its brand appeal [20][50] - The management is cautious about the potential impact of the end of federal student loan holidays on credit performance but remains optimistic about consumer behavior [14][18] Q&A Session Summary Question: How to think about loan sales and capital return? - Management reiterated commitment to capital allocation and returns, indicating a focus on selling loans and buying back shares as long as market conditions remain favorable [24][25] Question: What drives the guidance increase related to credit losses? - The increase in guidance was attributed to a reduction in CECL reserves due to improved credit performance and adjustments in the probability of default model [30][31] Question: What type of yields are being seen in the loan sales marketplace? - Management expressed optimism about the loan sales market, noting recent interest rate movements as beneficial [33][34] Question: What is the competitive landscape like? - The competitive environment is described as moderately competitive, with no significant irrational pricing or new product features that would disrupt the market [35][36] Question: Expectations for delinquency trends post-payment holidays? - Management anticipates charge-offs may trend higher but expects to stabilize around the 2% level by year-end [38][39] Question: Impact of recent bankruptcy ruling on private student loans? - Management is not troubled by the ruling, emphasizing the strong credit performance of their borrowers and the nature of their loan portfolio [42][43] Question: Insights on new product development and branding initiatives? - The company is focused on customer-centric diversification, developing new products that align with their brand and customer needs, while also enhancing their digital experience [48][50][66]

Call Start: 08:00 January 1, 0000 9:04 AM ET SLM Corporation (NASDAQ:SLM) Q1 2021 Earnings Conference Call April 22, 2021 08:00 ET Company Participants Brian Cronin - Vice President of Investor Relations Jonathan Witter - Chief Executive Officer Steve McGarry - Chief Financial Officer Conference Call Participants Michael Kaye - Wells Fargo Moshe Orenbuch - Credit Suisse Steven Kwok - KBW Melissa Wedel - JPMorgan Arren Cyganovich - Citi Vincent Caintic - Stephens Jordan Hymowitz - Philadelphia Financial Mana ...

SLM Corporation (NASDAQ:SLM) Q4 2020 Earnings Conference Call January 28, 2021 8:00 AM ET Company Participants Brian J. Cronin - Vice President of Investor Relations Jon Witter - Chief Executive Officer Steve McGarry - Chief Financial Officer Conference Call Participants Sanjay Sakhrani - KBW Michael Kaye - Wells Fargo Mark DeVries - Barclays Rick Shane - JPMorgan Moshe Orenbuch - Credit Suisse Jordan Hymowitz - Philadelphia Financial Management Henry Coffey - Wedbush Securities Operator Ladies and gentleme ...