Financial Data and Key Metrics Changes - GAAP diluted EPS for Q3 2022 was $0.29, up from $0.24 in the same quarter last year [6] - Net interest income for the first nine months of 2022 was $1.1 billion, higher than the previous year despite slightly lower loan balances [7] - Total provision for credit losses was $208 million in Q3 2022, an increase of $177 million from the prior quarter [17] Business Line Data and Key Metrics Changes - Private education loan originations for Q3 2022 were $2.4 billion, a 13% increase compared to Q3 2021 [9] - The co-signer rate for Q3 2022 was 89%, slightly up from 88% in Q3 2021 [9] - The private education loan reserve was $1.3 billion, or 5.5% of total student loan exposure, up from 5.2% a year ago [14] Market Data and Key Metrics Changes - The company experienced a 15% increase in underclassmen application growth, contributing to overall application growth of 13% [9] - Private education loans delinquent for 30-plus days were 3.7%, unchanged from Q2 2022 but up from 2.4% a year ago [18] Company Strategy and Development Direction - The company is focusing on strengthening its core business and maximizing brand value, evidenced by strong origination growth and well-managed operating expenses [22] - The acquisition of Nitro College is expected to enhance direct-to-consumer marketing capabilities and broaden data collection [22] - The company has decided to exit the credit card business to focus on more profitable opportunities [23] Management's Comments on Operating Environment and Future Outlook - Management remains confident that the factors driving higher charge-offs in 2022 will normalize by the start of 2023 [12] - The macroeconomic environment is volatile, but the company does not see a weakening of its core portfolio [24] - The company expects to continue its share buyback strategy while managing capital reserves effectively [46] Other Important Information - The company ended Q3 2022 with liquidity of 23.2% of total assets and total risk-based capital at 14.6% [21] - The effective tax rate for Q3 2022 was 28.2%, higher than the previous year due to lower than expected tax credits [20] Q&A Session Summary Question: Future loan growth and gain on sale sustainability - Management indicated that predicting market conditions is challenging, but they expect a continued positive relationship between loan sales and share buybacks [29][30] Question: Behavior of students returning to school and prepayment speeds - Management noted that the pandemic's impact on student behavior varies by region and that slower prepayment speeds are viewed positively for the business [34] Question: Credit card business exit and potential for positive mix shift - Management acknowledged that consolidations have not been a significant part of their business and do not expect a material change in credit metrics due to the exit from the credit card space [39] Question: Insights on loan sale auction process - Management shared that interest in loan sales has increased, attracting a diverse range of buyers, including insurance companies and hedge funds [41] Question: Funding strategy and deposit growth - Management confirmed that their funding strategy relies on deposits for 80% of funding and plans modest balance sheet growth in the coming years [49]

Part I. Financial Information [Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents SLM Corporation's unaudited consolidated financial statements as of September 30, 2022, including balance sheets, income statements, and cash flow statements Consolidated Balance Sheet Highlights (Unaudited, in thousands) | Metric | September 30, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Cash and cash equivalents | $4,846,754 | $4,334,603 | | Loans held for investment, net | $19,622,302 | $20,341,283 | | Total assets | $29,139,088 | $29,221,899 | | Deposits | $21,276,748 | $20,828,124 | | Total liabilities | $27,156,860 | $27,072,188 | | Total equity | $1,982,228 | $2,149,711 | Consolidated Statements of Income Highlights (Unaudited, in thousands, except per share) | Metric | Three Months Ended Sep 30, 2022 | Three Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2021 | | :--- | :--- | :--- | :--- | :--- | | Net interest income | $369,510 | $357,518 | $1,107,350 | $1,027,416 | | Provisions for credit losses | $207,598 | $138,442 | $336,193 | $(17,648) | | Net income | $75,172 | $72,840 | $546,057 | $854,248 | | Diluted earnings per common share | $0.29 | $0.24 | $2.03 | $2.59 | [Notes to the Financial Statements](index=12&type=section&id=Item%201.%20Notes%20to%20the%20Financial%20Statements) This section provides detailed disclosures on significant accounting policies, investments, loans, credit losses, borrowings, equity, and regulatory capital [Note 1. Significant Accounting Policies](index=12&type=section&id=1.%20Significant%20Accounting%20Policies) The company's interim financial statements adhere to U.S. GAAP, reflecting the Nitro College acquisition and early adoption of ASU 2022-02 - On March 4, 2022, the company acquired the assets of Nitro College to expand digital marketing capabilities and reduce customer acquisition costs, resulting in goodwill of **$51 million** and identifiable intangible assets of approximately **$75 million**[20](index=20&type=chunk) - The company elected to early adopt ASU No. 2022-02 prospectively from January 1, 2022, eliminating accounting guidance for Troubled Debt Restructurings (TDRs) and enhancing disclosure requirements for certain loan modifications, with an immaterial impact on financial statements[23](index=23&type=chunk) [Note 2. Investments](index=14&type=section&id=2.%20Investments) The investment portfolio includes trading and AFS securities, with AFS investments totaling **$2.43 billion** and **$216 million** in unrealized losses due to rising interest rates Available-for-Sale Investments Composition (As of Sep 30, 2022, in thousands) | Security Type | Amortized Cost | Estimated Fair Value | Gross Unrealized Losses | | :--- | :--- | :--- | :--- | | Mortgage-backed securities | $394,753 | $323,072 | $(71,682) | | U.S. government-sponsored enterprises and Treasuries | $1,928,886 | $1,804,647 | $(124,239) | | Other securities | $316,317 | $296,516 | $(19,801) | | **Total** | **$2,643,540** | **$2,427,540** | **$(216,001)** | - The decline in the fair value of AFS securities from December 31, 2021, to September 30, 2022, was primarily driven by the rising interest rate environment and is not considered credit-related, with the company intending and able to hold these securities until recovery[32](index=32&type=chunk) [Note 3. Loans Held for Investment](index=17&type=section&id=3.%20Loans%20Held%20for%20Investment) The loan portfolio, primarily private education loans, totaled **$19.6 billion** as of September 30, 2022, with **$3.29 billion** in loan sales generating **$325 million** in gains Loans Held for Investment, Net (in thousands) | Loan Type | September 30, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Private Education Loans, net | $18,980,852 | $19,625,374 | | FFELP Loans, net | $641,450 | $692,954 | | Credit Cards, net | $0 | $22,955 | | **Total** | **$19,622,302** | **$20,341,283** | - In the first nine months of 2022, the company sold approximately **$3.29 billion** of Private Education Loans to unaffiliated third parties, resulting in recognized gains of **$325 million**[41](index=41&type=chunk) [Note 5. Allowance for Credit Losses](index=19&type=section&id=5.%20Allowance%20for%20Credit%20Losses) The allowance for credit losses reached **$1.19 billion**, with a **$336 million** provision for the nine months ended September 30, 2022, reflecting increased charge-offs and policy changes Allowance for Credit Losses Activity (Nine Months Ended Sep 30, 2022, in thousands) | Metric | Private Education Loans | Total | | :--- | :--- | :--- | | Beginning Balance | $1,158,977 | $1,165,335 | | Total Provisions | $(2,852) | $(2,479) | | Net Charge-offs | $(269,289) | $(272,209) | | **Ending Balance** | **$1,190,427** | **$1,194,238** | - Charge-offs increased in Q3 and the first nine months of 2022 compared to 2021 due to changes in credit administration practices that imposed stricter requirements for forbearance, elevated losses from borrowers who took a "gap year" during the pandemic, and strain on collections from increased activity and staffing shortages[60](index=60&type=chunk) - As of September 30, 2022, **87%** of the gross Private Education Loan portfolio had a cosigner, and **45%** had a FICO score at origination of 750 or greater[73](index=73&type=chunk) [Note 8. Deposits](index=35&type=section&id=8.%20Deposits) Total deposits increased to **$21.3 billion** by September 30, 2022, with a significant rise in weighted average interest rates due to market conditions Deposit Composition (in thousands) | Deposit Type | September 30, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Money market | $11,053,370 | $10,473,569 | | Savings | $947,870 | $959,122 | | Certificates of deposit | $9,274,941 | $9,394,001 | | **Total Interest-Bearing** | **$21,276,181** | **$20,826,692** | [Note 9. Borrowings](index=36&type=section&id=9.%20Borrowings) Total borrowings decreased to **$5.5 billion** by September 30, 2022, including a **$575 million** ABS transaction and **$344 million** in unconsolidated VIE exposures Total Borrowings (in thousands) | Borrowing Type | September 30, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Unsecured borrowings | $988,182 | $986,138 | | Secured borrowings | $4,534,129 | $4,944,852 | | **Total** | **$5,522,311** | **$5,930,990** | - On August 9, 2022, the company executed the **$575 million** SMB Private Education Loan Trust 2022-C term ABS transaction, accounted for as a secured financing, with notes priced at a weighted average SOFR equivalent cost of SOFR plus **1.76%**[106](index=106&type=chunk) [Note 11. Stockholders' Equity](index=44&type=section&id=11.%20Stockholders'%20Equity) The company repurchased **30.7 million** shares for **$553 million** and paid a **$0.11** per share dividend in Q3 2022, with **$736 million** remaining for repurchases Share Repurchase Activity | Period | Shares Repurchased (in actuals) | Average Price per Share | | :--- | :--- | :--- | | Three Months Ended Sep 30, 2022 | 1,191,544 | $14.14 | | Nine Months Ended Sep 30, 2022 | 30,721,944 | $18.00 | - The company paid a common stock dividend of **$0.11** per share in Q3 2022, an increase from **$0.03** per share in Q3 2021, with total dividends for the first nine months of 2022 at **$0.33** per share compared to **$0.09** in the prior year period[134](index=134&type=chunk) [Note 14. Regulatory Capital](index=49&type=section&id=14.%20Regulatory%20Capital) Sallie Mae Bank remains 'well capitalized' with all regulatory capital ratios, including **13.3%** Common Equity Tier 1, significantly exceeding minimum requirements Sallie Mae Bank Capital Ratios (As of Sep 30, 2022) | Ratio | Actual | Minimum Requirement + Buffer | | :--- | :--- | :--- | | Common Equity Tier 1 Capital | 13.3% | > 7.0% | | Tier 1 Capital | 13.3% | > 8.5% | | Total Capital | 14.6% | > 10.5% | | Tier 1 Leverage | 10.6% | > 4.0% | [Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=53&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's analysis of financial performance for Q3 and the first nine months of 2022, covering key drivers, strategic initiatives, and financial condition - The company is focused on strategic imperatives including maximizing its core private student loan business, optimizing its brand, and maintaining a rigorous capital return program[175](index=175&type=chunk) - Strategic actions in 2022 include the acquisition of Nitro College to enhance digital marketing, the sale of **$3.29 billion** in Private Education Loans, and the decision to exit and sell the credit card business to focus on core strategies[175](index=175&type=chunk)[176](index=176&type=chunk)[179](index=179&type=chunk) [Results of Operations](index=60&type=section&id=Results%20of%20Operations) Q3 2022 net income was **$75 million** (up from **$73 million**), driven by net interest income and loan sale gains, while nine-month net income decreased to **$546 million** due to higher credit loss provisions - **Q3 2022 vs. Q3 2021:** Net interest income rose by **$12 million** due to a **24-basis point** increase in net interest margin as assets repriced faster than liabilities in a rising rate environment, partially offset by a **$70 million** increase in the provision for credit losses[184](index=184&type=chunk) - **Nine Months 2022 vs. 2021:** Net income decreased by **$308 million**, largely due to the provision for credit losses swinging from a negative **$18 million** in 2021 to a positive **$336 million** in 2022, with gains on loan sales also decreasing by **$78 million**[186](index=186&type=chunk) [Financial Condition](index=63&type=section&id=Financial%20Condition) The net student loan portfolio decreased to **$19.6 billion**, with delinquencies rising to **3.7%** due to policy changes and economic pressures, while the allowance for credit losses was **5.92%** Private Education Loan Credit Quality Indicators | Metric | September 30, 2022 | September 30, 2021 | | :--- | :--- | :--- | | Delinquencies as % of loans in repayment | 3.7% | 2.4% | | Forbearance as % of loans in repayment & forbearance | 1.4% | 2.3% | | Net charge-offs as % of avg. loans in repayment (annualized, Q3) | 2.67% | 1.29% | - The increase in delinquency rates is attributed to changes in credit administration practices implemented in 2021 that tightened forbearance requirements, as well as economic strain on borrowers and the company's collection teams[219](index=219&type=chunk) [Liquidity and Capital Resources](index=76&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains strong liquidity with **$7.0 billion** in cash and investments, stable **$21.3 billion** deposits, and a 'well capitalized' bank subsidiary, supporting **$2.2 billion** in loan commitments - Total primary liquidity sources, including unrestricted cash and available-for-sale investments, stood at **$7.0 billion** at September 30, 2022[233](index=233&type=chunk) - The company has **$2.2 billion** of outstanding contractual loan commitments to be funded during the 2022/2023 academic year, with a corresponding reserve of **$108 million** for expected credit losses[258](index=258&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=83&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company manages interest rate risk using EAR and EVE analyses, showing low sensitivity with a **+100 basis point** rate shock increasing net interest income by **0.6%** and decreasing EVE by **2.0%** Interest Rate Sensitivity Analysis (As of Sep 30, 2022) | Scenario | Earnings at Risk (EAR) - Shock | Economic Value of Equity (EVE) | | :--- | :--- | :--- | | +300 Basis Points | +1.8% | -6.0% | | +100 Basis Points | +0.6% | -2.0% | | -100 Basis Points | -0.7% | +1.8% | [Controls and Procedures](index=86&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of September 30, 2022, with no material changes to internal control over financial reporting - Based on an evaluation as of September 30, 2022, the principal executive officer and principal financial officer concluded that the company's disclosure controls and procedures were effective[275](index=275&type=chunk) Part II. Other Information [Legal Proceedings](index=87&type=section&id=Item%201.%20Legal%20Proceedings) The company is subject to various claims, lawsuits, and regulatory inquiries in the normal course of business and cooperates with all such requests - The company is subject to various claims and legal actions in the normal course of business and cooperates with requests from state attorneys general and other administrative agencies[278](index=278&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=87&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company repurchased **1.2 million** shares at **$14.14** per share in Q3 2022, with **$736 million** remaining for future repurchases under existing programs Share Repurchases (Q3 2022, in thousands) | Month (2022) | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | July | 0 | N/A | | August | 0 | N/A | | September | 1,192 | $14.14 | | **Total Q3** | **1,192** | **$14.14** | - As of September 30, 2022, approximately **$736 million** remained available for purchase under the company's share repurchase programs[281](index=281&type=chunk)

Financial Data and Key Metrics Changes - GAAP diluted EPS for Q2 2022 was $1.29, up from $0.44 in the same quarter last year [6] - The company repurchased 20 million shares, reducing shares outstanding by 11% since January 1, 2022, and by 42% since January 2020 [7] - Net charge-offs from private education loans were $95.5 million, resulting in an annualized charge-off rate of 2.56%, exceeding the forecast of 2.25% [12] - NIM for the quarter was 5.29%, up from 4.7% in the year-ago quarter [12] Business Line Data and Key Metrics Changes - Private education loan originations for Q2 2022 were $616 million, a 16% increase over Q2 2021 [7] - The cosigner rate for Q2 2022 was 74%, down from 76% in Q2 2021, with an average FICO score of 746 compared to 750 in the previous year [8] - Consolidation volume showed signs of slowing, with a 21% decrease in monthly consolidation volume from June 2021 to June 2022 [8] Market Data and Key Metrics Changes - The high school class of 2022's FAFSA completion rate returned to near pre-pandemic levels at 52.1% [7] - The company expects 30-plus day delinquencies to drop in Q3 and end the year near 3% [11] Company Strategy and Development Direction - The company is focused on executing its loan sale and share buyback program while navigating a challenging economic environment [5] - Full-year net charge-off guidance was increased to $325 million to $345 million, reflecting expectations of higher charge-offs due to specific borrower cohorts [14] - The company plans to continue its share buyback program as long as it remains within the "green zone" of value creation [36] Management's Comments on Operating Environment and Future Outlook - Management noted that the college marketplace is finding its new normal after pandemic-related disruptions [14] - The company is monitoring its portfolio for signs of stress but reports that borrower FICO scores remain strong [23] - Management expressed confidence that the unique charge-off trends observed in 2022 will not repeat in future years [19] Other Important Information - Operating expenses for Q2 2022 were $132 million, unchanged from the prior quarter [13] - The company ended the quarter with liquidity of 20.3% of total assets and total risk-based capital at 15.6% [13] Q&A Session Summary Question: Concerns about the gap year population and future charge-offs - Management acknowledged the gap year population's performance has been worse than expected but noted that trends are normalizing [30][31] Question: Impact of credit administration policy changes - Management indicated that the impact of these changes is expected to be more temporary and specific to 2022 [41][43] Question: Clarification on loan sale premiums and strategy - Management explained that they assess loan sales based on a decision matrix considering premiums and stock multiples to create shareholder value [35][36] Question: Future provisions and charge-off expectations - Management confirmed that the current year's unique charge-off effects would not carry over into future years, leading to a lower provision run rate [51][53]

Start Time: 08:00 January 1, 0000 8:47 AM ET SLM Corporation (NASDAQ:SLM) Q1 2022 Earnings Conference Call April 28, 2022, 08:00 AM ET Company Participants Jon Witter - CEO Steve McGarry - EVP and CFO Brian Cronin - VP, IR Conference Call Participants Michael Kaye - Wells Fargo Moshe Orenbuch - Credit Suisse Steven Kwok - Keefe, Bruyette & Woods Vincent Caintic - Stephens Melissa Wedel - JPMorgan Operator Ladies and gentlemen, thank you for standing by, and welcome to the 2022 Q1 Sallie Mae Earnings Confere ...

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]