Core Viewpoint - Sallie Mae reported quarterly earnings of $0.63 per share, missing the Zacks Consensus Estimate of $0.84 per share, representing a -25.00% earnings surprise [1] - The company posted revenues of $372.98 million for the quarter ended September 2025, which was 0.76% below the Zacks Consensus Estimate, but an increase from $359.4 million year-over-year [2] Company Performance - Over the last four quarters, Sallie Mae has surpassed consensus EPS estimates only once [2] - The stock has underperformed the market, losing about 2.1% since the beginning of the year compared to the S&P 500's gain of 13.9% [3] Future Outlook - The company's earnings outlook will be crucial for investors, including current consensus earnings expectations for upcoming quarters [4] - The current consensus EPS estimate for the next quarter is $0.50 on revenues of $393.46 million, and for the current fiscal year, it is $3.08 on revenues of $1.52 billion [7] Industry Context - The Financial - Consumer Loans industry, to which Sallie Mae belongs, is currently in the top 40% of over 250 Zacks industries, indicating a favorable industry outlook [8] - Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can impact stock performance [5]

Financial Data and Key Metrics Changes - GAAP diluted EPS for Q3 2025 was $0.63 per share, with loan originations of $2.9 billion, reflecting a 6.4% increase year-over-year and 6% growth year-to-date [4][5] - Net interest income for Q3 2025 was $373 million, up $14 million from the prior year, with a net interest margin of 5.18%, an increase of 18 basis points year-over-year [6][7] - Provision for credit losses decreased to $179 million from $271 million in the prior year, largely due to a $119 million provision release from the loan sale [6][7] Business Line Data and Key Metrics Changes - The cosigner rate for Q3 was 95%, up from 92% in the year-ago quarter, and the average FICO score at approval increased to 756 from 754, indicating strong underwriting discipline [5] - Private education loan net charge-offs were $78 million, representing 1.95% of average private education loans in repayment, down 13 basis points from the year-ago quarter [5][6] - Non-interest expenses for Q3 were $180 million, compared to $167 million in the prior quarter and $172 million in the year-ago quarter [9] Market Data and Key Metrics Changes - 4% of private education loans in repayment were 30 days or more delinquent, up from 3.6% at the end of the year-ago quarter, attributed to changes in loan modification eligibility criteria [7][8] - The company has seen stability in late-stage delinquencies and roll rates, with 80% of borrowers in loan modification programs making consistent payments after one year [8][9] Company Strategy and Development Direction - The company is optimistic about the long-term outlook for private student lending and is exploring alternative funding partnerships in the private credit space [10][11] - A first-of-its-kind partnership is expected to be announced soon, aimed at unlocking the value of the customer base and setting the stage for sustainable growth of fee-based revenues [11][12] - The company anticipates selling a small portfolio of seasoned loans and a portion of recent peak season originations, expecting GAAP earnings per common share for 2025 to be between $3.20 and $3.30 [12] Management's Comments on Operating Environment and Future Outlook - Management noted that despite economic ambiguity, there has been no material change in borrowers' ability to meet obligations [5][10] - The company is preparing for the impact of recent federal reforms, which are expected to create opportunities for growth in private student lending [10][11] - Management expressed confidence in maintaining a net charge-off rate in the high 1% to low 2% range over the long term [14][26] Other Important Information - The company has reduced outstanding shares by 55% since initiating its capital return strategy in 2020, repurchasing 5.6 million shares at an average price of $29.45 per share [5][6] - The liquidity ratio at the end of the quarter was 15.8%, with total risk-based capital at 12.6% and CET1 capital at 11.3% [9] Q&A Session Summary Question: Outlook for delinquency performance - Management expressed satisfaction with loan modification programs and expected stability in late-stage delinquencies and roll rates, despite a slight uptick in early-stage delinquencies [14][15] Question: Details on loan sale partnership - Management indicated that details on the loan sale partnership would be released once finalized, emphasizing the importance of the deal [15][20] Question: Impact of modifications on delinquency rates - Management noted that borrowers in modification programs have shown strong payment patterns, and they are optimistic about the upcoming wave of graduates transitioning into repayment [19][48] Question: Credit outlook and potential charge-offs - Management acknowledged the correlation between delinquencies and charge-offs but maintained confidence in their guidance and the effectiveness of their loan modification programs [24][34] Question: Buyback strategy and appetite - Management confirmed a commitment to aggressive share buybacks, with plans to assess timing and quantity post-partnership completion [86][87] Question: Opportunities from Plus Reform - Management sees Plus Reform as a significant opportunity for growth in private student lending, with potential annual origination increases projected in the $4 to $5 billion range [92][93]

Financial Data and Key Metrics Changes - GAAP diluted EPS for Q3 2025 was $0.63 per share, with loan originations of $2.9 billion, reflecting a 6.4% increase year-over-year and 6% growth year-to-date [4][5] - Net interest income for Q3 2025 was $373 million, up $14 million from the prior year, with a net interest margin of 5.18%, an increase of 18 basis points year-over-year [6][7] - Provision for credit losses was $179 million, down from $271 million in the prior year quarter, largely due to a $119 million provision release from the loan sale [6][7] Business Line Data and Key Metrics Changes - The cosigner rate for Q3 2025 was 95%, up from 92% in the year-ago quarter, and the average FICO score at approval increased to 756 from 754 [5] - Private education loan net charge-offs in Q3 2025 were $78 million, representing 1.95% of average private education loans in repayment, down 13 basis points from the year-ago quarter [5][6] - Non-interest expenses for Q3 2025 were $180 million, compared to $167 million in the prior quarter and $172 million in the year-ago quarter [9] Market Data and Key Metrics Changes - 4% of private education loans in repayment were 30 days or more delinquent, up from 3.6% at the end of the year-ago quarter, attributed to changes in loan modification eligibility criteria [7][8] - Graduate loan originations increased by 11% year-over-year, driven by behavioral changes from borrowers and a focus on graduate marketing [34][36] Company Strategy and Development Direction - The company is optimistic about the long-term outlook for private student lending and plans to explore alternative funding partnerships in the private credit space [10][11] - A first-of-its-kind partnership is expected to be announced soon, aimed at unlocking the value of the customer base and setting the stage for sustainable growth of fee-based revenues [11][12] - The company anticipates selling a small portfolio of seasoned loans and a portion of recent peak season originations, expecting GAAP earnings per common share for 2025 to be between $3.20-$3.30 [12] Management's Comments on Operating Environment and Future Outlook - Management noted that despite economic ambiguity, there has been no material change in borrowers' ability to meet obligations [5][10] - The company is prepared for the transition period for graduates entering repayment, emphasizing the importance of outreach programs to assist borrowers [49][51] - Management remains confident in the long-term metrics and guidance provided, despite the challenges posed by the current economic environment [26][88] Other Important Information - The company has reduced outstanding shares by 55% since initiating its capital return strategy in 2020, repurchasing 5.6 million shares at an average price of $29.45 per share [5][6] - The liquidity ratio at the end of the quarter was 15.8%, with total risk-based capital at 12.6% and CET1 capital at 11.3% [9] Q&A Session Summary Question: Outlook on delinquency performance - Management expressed satisfaction with loan modification program performance and expects stability in late-stage delinquencies and roll rates [14] Question: Details on loan sale partnership - Management is finalizing the deal and will provide details once completed, emphasizing the importance of the partnership for future growth [15] Question: Impact of modifications on delinquency rates - Management noted that borrowers in modification programs show strong payment patterns, and they are optimistic about the upcoming wave of graduates transitioning into repayment [19][20] Question: Credit outlook and charge-offs - Management indicated that while delinquencies are up year-over-year, they expect charge-offs to remain stable, with a long-term target of 1.9%-2.1% [26][34] Question: Impact of recent credit market volatility - Management acknowledged that market conditions could affect gain on sale margins but emphasized their historical success in loan sales [40] Question: Opportunities from Plus Reform - Management sees Plus Reform as a significant opportunity for growth in private student lending, with potential annual origination increases of $4 billion-$5 billion [90][91]

Financial Data and Key Metrics Changes - GAAP diluted EPS for Q3 2025 was $0.63 per share, with loan originations of $2.9 billion, reflecting a 6.4% increase year-over-year and 6% growth year-to-date [3][4] - Net interest income for Q3 2025 was $373 million, up $14 million from the prior year, with a net interest margin of 5.18%, an increase of 18 basis points year-over-year [5][6] - Provision for credit losses was $179 million, down from $271 million in the prior year quarter, largely due to a $119 million provision release from a loan sale [5][6] Business Line Data and Key Metrics Changes - Cosigner rate increased to 95% from 92% year-over-year, and the average FICO score at approval rose to 756 from 754, indicating improved underwriting discipline [4] - Private education loan net charge-offs in Q3 2025 were $78 million, representing 1.95% of average private education loans in repayment, down 13 basis points from the year-ago quarter [4] Market Data and Key Metrics Changes - The delinquency rate for private education loans in repayment was 4%, up from 3.6% year-over-year, attributed to changes in loan modification eligibility criteria [7][8] - The company noted stability in late-stage delinquencies and roll rates, with 80% of borrowers in loan modification programs making consistent payments [8] Company Strategy and Development Direction - The company is optimistic about the long-term outlook for private student lending and is exploring alternative funding partnerships in the private credit space [10][11] - A first-of-its-kind partnership is expected to be announced soon, aimed at unlocking value from the customer base and setting the stage for sustainable growth of fee-based revenues [11] - The company anticipates selling a small portfolio of seasoned loans and a portion of recent peak season originations, expecting GAAP earnings per common share for 2025 to be between $3.20 and $3.30 [11][12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate economic ambiguity, noting no material changes in borrowers' ability to meet obligations [4][10] - The company is preparing for the impact of recent federal reforms, which are expected to create opportunities for growth in private student lending [10][69] Other Important Information - The company has reduced outstanding shares by 55% since initiating its capital return strategy in 2020, repurchasing 5.6 million shares at an average price of $29.45 per share [4][5] - Liquidity and capital positions remain strong, with a liquidity ratio of 15.8% and total risk-based capital at 12.6% [9] Q&A Session Summary Question: Outlook for delinquency performance - Management is pleased with loan modification program performance and expects stability in late-stage delinquencies and roll rates, maintaining guidance for the end of the year [13][14] Question: Details on loan sale terms - Specific details on the loan sale are still being finalized, with more information expected to be shared at the investor forum [15] Question: Modification volume and delinquency rates - The company is optimistic about the performance of borrowers in modification programs, with strong payment patterns observed [18][19] Question: Credit outlook and charge-offs - Management believes that delinquencies will remain flat within normal operational variability, reaffirming long-term net charge-off guidance [22][24] Question: Impact of market volatility on gain on sale margins - The company has historically achieved successful loan sales in the mid to high single-digit range, with margins influenced by market conditions [34] Question: Buyback strategy and authorization - The company remains committed to aggressive share buybacks, with plans to assess timing and quantity based on upcoming partnership developments [64][66] Question: Opportunities from federal policy changes - The company views federal reforms as a significant opportunity for growth in private student lending, with potential annual origination increases estimated at $4 to $5 billion [69][70]

Financial Data and Key Metrics Changes - GAAP diluted EPS for Q3 2025 was $0.63 per share [4] - Loan originations for Q3 were $2.9 billion, representing a 6.4% growth year-over-year and 6% growth year-to-date [5] - Net interest income for 2025 was $373 million, up $14 million from the prior year quarter [7] - Net interest margin was 5.18%, 18 basis points higher than the year-ago quarter [7] - Provision for credit losses was $179 million, down from $271 million in the prior year [8] - Non-interest expenses were $180 million, compared to $172 million in the year-ago quarter [12] Business Line Data and Key Metrics Changes - Cosigner rate for Q3 was 95%, up from 92% in the year-ago quarter [5] - Average FICO score at approval increased to 756 from 754 [5] - Private education loan net charge-offs were $78 million, representing 1.95% of average private education loans in repayment, down 13 basis points from the year-ago quarter [6] Market Data and Key Metrics Changes - 4% of private education loans in repayment were thirty days or more delinquent, up from 3.6% at the end of the year-ago quarter [10] - Stability in late-stage delinquencies and roll rates was observed [11] Company Strategy and Development Direction - The company is optimistic about the long-term outlook for private student lending and plans to explore alternative funding partnerships in the private credit space [14][15] - A first-of-its-kind partnership is expected to be announced soon, aimed at unlocking the value of the customer base and setting the stage for sustainable growth [15] - The company anticipates selling a small portfolio of seasoned loans and a portion of recent peak season originations [16] Management's Comments on Operating Environment and Future Outlook - Management noted that despite economic ambiguity, there has been no material change in borrowers' ability to meet obligations [6] - The company is encouraged by the opportunities created by recent federal reforms [14] - Management expressed confidence in maintaining a net charge-off rate in the high ones to low 2% range over the long term [21] Other Important Information - The company has reduced outstanding shares by 55% since initiating its capital return strategy in 2020 [6] - Liquidity ratio at the end of the quarter was 15.8%, with total risk-based capital at 12.6% and common equity Tier one capital at 11.3% [12] Q&A Session Summary Question: Outlook on delinquency performance - Management expressed satisfaction with the loan modification programs and expects stability in late-stage delinquencies and roll rates [20][21] Question: Details on loan sale terms - Management indicated that details on the loan sale will be released once the deal is finalized [22] Question: Performance of modifications and roll-off - Management noted strong payment patterns among borrowers in modification programs and is optimistic about their success [27] Question: Impact of credit market volatility on gain on sale margins - Management stated that gain on sale margins can vary based on market conditions, but they have historically achieved mid to high single-digit ranges [48] Question: Buyback appetite and authorization - Management confirmed a commitment to aggressive share buybacks, with plans to assess timing and quantity post-partnership completion [90] Question: General sentiment on credit outlook - Management believes that current economic conditions have not significantly impacted borrowers' ability to meet obligations, despite general concerns [93]

3 rd Quarter 2025 Earnings Presentation 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 October 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 ended September 30, 2025, furnished to the Securities and Exchange Commission ("SEC") on October 23, 2025, ...

Financial Performance - For the three months ended September 30, 2025, net income attributable to common stock was $132 million, or $0.63 diluted earnings per common share, compared to a net loss of $50 million, or $0.23 loss per common share for the same period in 2024[205]. - Net interest income for the three months ended September 30, 2025, was $373 million, an increase of 4% from $359 million in the same period of 2024[204]. - Non-interest income for the three months ended September 30, 2025, was $173 million, a significant increase of 621% from $24 million in the same period of 2024[204]. - The company reported a return on assets of 1.9% for the three months ended September 30, 2025, compared to a return of (0.6)% for the same period in 2024[199]. - Net income attributable to common stock for the nine months ended September 30, 2025, was $500 million, or $2.35 diluted earnings per share, compared to $483 million, or $2.18 diluted earnings per share, for the same period in 2024[214]. Credit Losses and Provisions - Provisions for credit losses decreased by 34% to $179 million for the three months ended September 30, 2025, compared to $271 million in the same period of 2024[204]. - Provision for credit losses for the nine months ended September 30, 2025, was $351 million, up from $300 million in the year-ago period, influenced by new loan commitments and changes in economic outlook[216]. - Provisions for credit losses for Private Education Loans totaled $179,462 thousand for the three months ended September 30, 2025, down from $271,465 thousand in the same period of 2024, indicating a decrease of about 33.9%[237]. - The total provisions for credit losses for the nine months ended September 30, 2025, were $351,466 thousand, compared to $300,336 thousand in 2024, reflecting an increase of about 17.0%[237]. Loan Performance - The ending balance of private education loans, net, was $21.62 billion as of September 30, 2025, compared to $20.46 billion as of September 30, 2024[199]. - Total Private Education Loan originations for the three months ended September 30, 2025, amounted to $2,936,393, up from $2,758,529 in the same period of 2024, reflecting a 6.5% increase[234]. - The average FICO score at approval for Private Education Loans in the three months ended September 30, 2025, was 756, slightly up from 754 in the same period of 2024[234]. - The percentage of loans in repayment that are current was 96.0% as of September 30, 2025, slightly down from 96.4% in 2024[242]. - Delinquencies as a percentage of Private Education Loans in repayment increased to 4.0% at September 30, 2025, up from 3.6% at September 30, 2024[243]. Operating Expenses - Total operating expenses for the three months ended September 30, 2025, were $180 million, an increase of 5% from $171 million in the same period of 2024[204]. - Total operating expenses for the first nine months of 2025 were $499 million, an increase from $488 million in the year-ago period, primarily due to increased marketing and IT spending[220]. Dividends and Shareholder Returns - The company declared dividends per common share of $0.13 for the three months ended September 30, 2025, an increase of 18% from $0.11 in the same period of 2024[204]. - The Bank declared dividends of $100 million and $294 million for the three and nine months ended September 30, 2025, respectively, compared to $116 million and $414 million for the same periods in 2024[2]. Capital and Liquidity - The Bank's risk-based capital ratios exceeded the required minimums under U.S. Basel III as of September 30, 2025, indicating strong capital management[290]. - The Common Equity Tier 1 risk-based capital ratio must be maintained above 7.0% to avoid restrictions on capital distributions, with the Bank currently meeting this requirement[291]. - Total unrestricted cash and liquid investments amount to $4,671,680 thousand as of September 30, 2025[272]. - The company maintains a significant liquidity buffer of cash and liquid investments, expected to be sustained through 2025[271]. Loan Commitments and Derivatives - The Bank has $2.7 billion in outstanding contractual loan commitments expected to be funded during the 2025/2026 academic year[4]. - The allowance for credit losses includes a reserve of $98 million for lifetime expected credit losses on unfunded commitments as of September 30, 2025[5]. - The Bank's total exposure to counterparties with credit ratings was entirely above S&P AA- or Moody's Aa3, indicating no exposure to lower-rated counterparties[287]. Interest Rate Risk Management - The company has a significant portion of earning assets indexed to the 30-day average SOFR, which is a core rate in interest rate risk analysis[319]. - Interest rate swaps and derivatives are utilized to align assets with debt, mitigating interest rate risk[327]. - The company anticipates low overall repricing risk due to the correlation of short-term indices[327].

Financial Performance - GAAP diluted earnings per common share for Q3 2025 were $0.63, an increase from $0.32 in Q3 2024[15] - Net income attributable to SLM Corporation common stock was $131,856 thousand for the three months ended September 30, 2025, compared to a loss of $49,800 thousand in the same period of 2024, marking a turnaround[27] - Basic earnings per common share for the three months ended September 30, 2025, was $0.64, compared to a loss of $0.23 in the same period of 2024, indicating a strong recovery[27] Loan and Credit Metrics - Private education loan originations grew by 6% year-over-year, with a total of $655 million to $675 million expected for the full year 2025[9] - Total net charge-offs as a percentage of average loans in repayment were 1.95%, down from 2.08% in Q3 2024[12] - Provisions for credit losses in Q3 2025 were $179 million, a decrease from $267 million in Q3 2024[12] - Average loans outstanding increased to $22.3 billion, up 9% from Q3 2024[12] - Loans held for investment increased to $21,615,067 thousand as of September 30, 2025, compared to $20,902,158 thousand at December 31, 2024, an increase of 3.41%[25] Income and Expenses - The net interest margin for Q3 2025 was 5.18%, an increase of 18 basis points from Q3 2024[9] - Total interest income for the nine months ended September 30, 2025, was $1,970,436 thousand, slightly up from $1,957,673 thousand in the same period of 2024, an increase of 0.65%[27] - Total non-interest income for the nine months ended September 30, 2025, was $405,522 thousand, up from $340,486 thousand in the same period of 2024, an increase of 19.14%[27] - Total non-interest expenses for Q3 2025 were $180 million, compared to $172 million in Q3 2024[13] Shareholder Returns - The company declared a common stock dividend of $0.13 per share in Q3 2025[10] - Declared dividends per common share increased to $0.13 for the three months ended September 30, 2025, compared to $0.11 in the same period of 2024, a rise of 18.18%[27] - The company repurchased 5.6 million shares for $166 million in Q3 2025, with $138 million remaining under the 2024 Share Repurchase Program[7][16] Balance Sheet Highlights - Total assets decreased to $29,605,422 thousand as of September 30, 2025, from $30,072,110 thousand at December 31, 2024, representing a decline of 1.55%[25] - Total liabilities decreased to $27,264,124 thousand as of September 30, 2025, from $27,912,190 thousand at December 31, 2024, a reduction of 2.33%[25] - Total equity increased to $2,341,298 thousand as of September 30, 2025, from $2,159,920 thousand at December 31, 2024, an increase of 8.39%[25] Other Financial Metrics - The return on assets (ROA) was 1.9%, up from 1.0% in the previous year[15] - Net interest income after provisions for credit losses increased to $193,515 thousand for the three months ended September 30, 2025, compared to $87,938 thousand for the same period in 2024, a significant increase of 120%[27]

Core Viewpoint - SLM Corporation, known as Sallie Mae, is a significant player in the private education loan sector in the U.S., focusing on originating and servicing private education loans for students seeking financial aid for higher education [1] Price Target and Analyst Sentiment - The consensus target price for SLM has remained stable at $37.50 over the last month and quarter, indicating a steady outlook from analysts [2][6] - Barclays has set a more conservative price target of $35, reflecting a cautious stance on SLM's future performance [2][6] - Over the past year, the average price target for SLM has increased from $33.67 to $37.50, suggesting a positive shift in analyst sentiment, potentially due to improved financial performance or strategic initiatives [3] Financial Performance - SLM's recent earnings report for Q2 2025 showed earnings per share at $0.32, which was significantly below the Zacks Consensus Estimate of $0.49, highlighting potential challenges ahead [3][6] - Increased credit loss provisions and expenses may have contributed to the cautious price target set by Barclays [5] Market Demand Influences - The demand for education loans is a critical factor influencing SLM's stock price, with the early opening of the Free Application for Federal Student Aid (FAFSA) for the 2026–27 academic year potentially impacting private education loan demand [4]

Core Points - Sallie Mae announced a fourth-quarter dividend for 2025 of $1.5121799 per share on its Preferred Stock Series B and $0.13 per share on its common stock [1][2] - The dividends will be paid on December 15, 2025, to stockholders of record as of December 4, 2025 [2] Company Overview - Sallie Mae, formally known as SLM Corporation, is a leader in private student lending, providing financing and resources to support access to college and lifelong learning [3][7] - The company emphasizes the importance of education and lifelong learning in helping individuals achieve their goals [3][7] Upcoming Events - Sallie Mae will release its third-quarter 2025 financial results after market close on October 23, 2025, with a live audio webcast available for investors [5]