SLM Corporation(US:JSM)2025-07-30 20:13Loan Portfolio and Originations - Navient owns and manages a portfolio of $29.6 billion of federally guaranteed Federal Family Education Loan Program (FFELP) Loans[21]. - The company originated $1.0 billion of Private Education Loans in the first half of 2025, an 87% increase from $538 million a year ago[22]. - Total originations of Private Education Loans nearly doubled to $1.0 billion in the first half of 2025 compared to $538 million a year ago[36]. - The company originated $500 million in Private Education Loans during the quarter, reflecting ongoing efforts to expand its lending portfolio[50]. - The total acquisitions (originations and purchases) for FFELP loans in the three months ended June 30, 2025, is $472 million, while for the same period in 2024, it was $247 million, showing a significant increase of 91.5%[101]. Financial Performance - Second-quarter 2025 net income was $14 million ($0.13 diluted earnings per share), a decrease of 61% compared to $36 million ($0.32 diluted earnings per share) in the same quarter of 2024[53]. - Core Earnings net income for the second quarter of 2025 was $21 million ($0.20 diluted Core Earnings per share), down from $33 million ($0.29 diluted Core Earnings per share) in the prior year, reflecting a 36% decline[48]. - Net income for the six months ended June 30, 2025, was $11 million, or $0.11 diluted earnings per share, compared to $109 million, or $0.97 diluted earnings per share, for the same period in 2024[58]. - Net income decreased to $26 million in Q2 2025, down 57% from $60 million in Q2 2024[80]. - Net income for Q2 2025 was $14 million, a decrease of 61% from $36 million in Q2 2024[175]. Loan Loss Provisions and Delinquencies - Provision for loan losses increased to $37 million in the second quarter of 2025, up from $14 million in the same quarter of 2024, primarily due to higher delinquencies and increased originations[50]. - Provisions for loan losses increased by $41 million, from $26 million to $67 million, with the provision for Private Education Loan losses rising from $27 million to $51 million[62]. - Delinquencies greater than 90 days increased to $2.5 billion compared to $1.9 billion in the previous year, while forbearances decreased from $5.3 billion to $3.7 billion[65]. - The total number of loans delinquent greater than 90 days for FFELP loans is 2,526 million as of June 30, 2025, which is an increase from 1,857 million on June 30, 2024, indicating a rise in long-term delinquencies[102]. - The percentage of loans greater than 90 days delinquent was 3% of total private education loans as of June 30, 2025, highlighting ongoing challenges in loan recovery[203]. Capital Management and Shareholder Returns - Total capital returned to shareholders in Q2 2025 was $40 million, consisting of $24 million in share repurchases and $16 million in dividends[28]. - Navient's share repurchase program authorized the purchase of up to $1 billion of the company's outstanding common stock, with $52 million remaining as of June 30, 2025[26]. - The company repurchased $24 million of common shares during the quarter, with $52 million of common share repurchase authority remaining outstanding[50]. - The company purchased 1.9 million shares of common stock for $24 million in the first quarter of 2025, with $52 million of unused share repurchase authority as of June 30, 2025[112]. - The company has a remaining $68 million available under its $1 billion share repurchase program approved in December 2021[160]. Operating Expenses and Efficiency - Operating expenses were $100 million in Q2 2025, a decrease of 40% from $166 million in Q2 2024[52]. - The company has recognized $42 million in restructuring and reorganization charges in 2024 and the first half of 2025, primarily related to severance[33]. - Operating expenses decreased by $123 million, primarily due to a decline in business processing expenses related to the aforementioned sales[62]. - The company reduced its headcount by over 80% since the beginning of 2024 as part of its strategic actions to simplify the company[33]. - Operating expenses included $47 million in unallocated shared services expenses[125]. Interest Income and Margin - Total interest income decreased by 20% to $778 million in Q2 2025 from $973 million in Q2 2024, while total interest expense also fell by 23% to $650 million[52]. - The net interest margin for the Federal Education Loans segment improved to 0.70% in Q2 2025, compared to 0.36% in Q2 2024, while the Consumer Lending segment's net interest margin was 2.32%, down from 2.89%[45]. - Net interest income decreased by $24 million, primarily due to the paydown of the FFELP and Private Education Loan portfolios, with prepayments dropping from $4.1 billion in the year-ago period to $485 million in the current period[62]. - Total interest income for the three months ended June 30, 2025, was $778 million, with education loans contributing $756 million[125]. - Net interest income after provisions for loan losses was $91 million, reflecting a decrease of 19% compared to the previous period[125]. Tax and Regulatory Compliance - The effective income tax rate decreased from 20% in the year-ago period to 9% in the current period, influenced by state tax expenses and changes in valuation allowances[62]. - The company’s disclosure controls and procedures were evaluated as effective as of June 30, 2025, ensuring compliance with SEC rules[162]. Asset and Liability Management - The company had unrestricted cash of $712 million and total liquidity of $1.273 billion as of June 30, 2025[113]. - The company has unsecured debt totaling $5.3 billion as of June 30, 2025, rated below investment grade by three credit rating agencies[110]. - Total assets decreased to $50.22 billion as of June 30, 2025, down from $51.79 billion at the end of 2024, representing a decline of approximately 3.1%[168]. - Total liabilities decreased to $47.66 billion, down from $49.15 billion, reflecting a decrease of about 3.0%[168]. - The company reported total unencumbered tangible assets of $2.9 billion, including $1.3 billion in unencumbered education loans[115].