Salliemae(SLM) - 2024 Q3 - Quarterly Results

Sallie Mae Third-Quarter 2024 Results Overview Third-Quarter 2024 Performance Summary Sallie Mae reported a GAAP net loss of $0.23 per common share for Q3 2024, a significant decrease from the $0.11 earnings per share in Q3 2023, despite achieving 13% year-over-year growth in Private Education Loan Originations and a substantial $271 million provision for credit losses Q3 2024 Key Performance Indicators | Metric | Q3 2024 Value | Note | | :--- | :--- | :--- | | GAAP Net Loss Per Common Share | $(0.23) | Compared to $0.11 EPS in Q3 2023 | | Private Education Loan Originations | $5.3 million | 13% growth from year-ago quarter | | Total Net Charge-Offs | $77 million | 2.09% of Average Loan Portfolio in Repayment (annualized) | | Provision for Credit Losses | $271 million | Increased from $198 million in Q3 2023 | | Non-Interest Expenses | $172 million | - | - CEO Jonathan Witter highlighted a successful peak season, outperforming origination growth estimates, and expressed satisfaction with trends in credit quality and charge-offs[4] Capital Allocation and Shareholder Returns Sallie Mae demonstrated a continued commitment to shareholder returns by increasing its fourth-quarter common stock dividend to $0.13 per share, actively repurchasing shares, and maintaining significant capacity under its 2024 Share Repurchase Program - The fourth-quarter dividend on common stock was increased from $0.11 to $0.13 per share, payable on December 16, 2024[1] - A fourth-quarter dividend on Preferred Stock Series B of $1.7448719 per share was also announced[1] - In Q3 2024, the company repurchased 5.3 million shares of common stock[4] - As of September 30, 2024, $448 million of capacity remained under the 2024 Share Repurchase Program[4][7] Private Education Loan Portfolio Trends The private education loan portfolio showed signs of improving credit quality in Q3 2024 compared to the prior year, with key metrics such as loans in hardship forbearance, delinquencies as a percentage of loans in repayment, and net charge-offs all decreasing year-over-year Loan Portfolio Credit Quality Trends | Metric | Q3 2024 | Q3 2023 | | :--- | :--- | :--- | | Average Loans Outstanding, net | $20.5 billion | Down 1% from Q3 2023 | | Loans in Hardship Forbearance | 1.01% | 1.17% | | Delinquencies (% of loans in repayment) | 3.60% | 3.65% | | Net Charge-Offs (% of avg. loans in repayment) | 2.08% | 2.53% | Full Year 2024 Guidance Sallie Mae provided its updated guidance for the full year 2024, projecting diluted earnings per share to be in the range of $2.70 to $2.80 and expecting continued strong growth in private education loan originations Full Year 2024 Company Expectations | Metric | Guidance Range | | :--- | :--- | | Diluted Earnings Per Common Share | $2.70 - $2.80 | | Private Education Loan Originations (YoY Growth) | 8% - 9% | | Total Loan Portfolio Net Charge-Offs | $325 million - $340 million | | Non-Interest Expenses | $635 million - $655 million | Financial Statements Statement of Operations In Q3 2024, Sallie Mae reported a net loss of $50 million, a significant reversal from the $25 million net income in Q3 2023, primarily driven by a 37% year-over-year increase in the provision for credit losses, which rose to $271 million, while net interest income saw a slight decline to $359 million from $385 million in the prior-year quarter Q3 Statement of Operations Highlights ($ millions) | Line Item | Q3 2024 | Q3 2023 | Change | | :--- | :--- | :--- | :--- | | Net Interest Income | $359 | $385 | (6.8%) | | Provision for Credit Losses | $271 | $198 | +36.9% | | Total Non-Interest Income | $24 | $24 | 0% | | Total Non-Interest Expenses | $172 | $170 | +1.2% | | Net Income (Loss) Attributable to Common Stock | $(50) | $25 | N/A | Balance Sheet As of September 30, 2024, Sallie Mae's total assets increased to $30.0 billion from $29.2 billion at the end of 2023, with growth primarily fueled by an increase in long-term borrowings, and total equity also grew to $2.13 billion from $1.88 billion over the same period Balance Sheet Highlights ($ thousands) | Line Item | September 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Total Assets | $30,012,767 | $29,169,468 | | Loans held for investment, net | $20,459,933 | $20,306,357 | | Deposits | $21,445,457 | $21,653,188 | | Long-term borrowings | $6,036,527 | $5,227,512 | | Total Equity | $2,133,750 | $1,880,797 | Key Performance Metrics Key profitability and performance metrics for Q3 2024 showed a significant decline compared to the same period last year, with Net Interest Margin compressing by 43 basis points to 5.00%, and both Return on Assets (ROA) and Return on Common Equity (ROCE) turning negative, reflecting the quarter's net loss Q3 Key Performance Metrics Comparison | Metric | Q3 2024 | Q3 2023 | | :--- | :--- | :--- | | Net Interest Margin | 5.00% | 5.43% | | Return on Assets (ROA) | (0.6)% | 0.4% | | Return on Common Equity (ROCE) | (10.2)% | 6.3% | | GAAP Diluted EPS | $(0.23) | $0.11 | Forward-Looking Statements Disclaimer This section contains standard cautionary language regarding forward-looking statements, including the 2024 guidance, outlining various risks and uncertainties that could cause actual results to differ materially from management's current expectations, and stating that the company does not undertake any obligation to update these statements - The press release contains forward-looking statements based on management's current expectations, including the 2024 guidance, loan sales, and share repurchases[9] - Actual results may differ materially due to various risks and uncertainties, including financing costs, liquidity limits, regulatory changes, credit risk, and general economic conditions[10] - The company does not commit to updating or revising any forward-looking statements to reflect actual results or subsequent events[11]