Sallie Mae Q4 Earnings & Revenues Miss Estimates, Expenses Rise

Core Viewpoint - Sallie Mae (SLM) reported mixed financial results for the fourth quarter of 2024, with earnings per share (EPS) of 50 cents, missing the consensus estimate of 54 cents, and a decline from 72 cents in the prior-year quarter [1][2][10] Financial Performance - The company's GAAP net income for the fourth quarter was $112 million, down from $168 million in the prior-year quarter [2] - For the full year 2024, EPS was $2.68, missing the consensus estimate of $2.72 but increasing from $2.41 in 2023 [3] - Net income for 2024 was reported at $608 million, reflecting a 46.8% increase from the prior year [3] Net Interest Income and Expenses - Fourth-quarter net interest income (NII) totaled $362 million, up 0.8% year over year, but missed the consensus estimate by 2.5% [4] - The quarterly net interest margin was 4.9%, down 45 basis points from the prior-year quarter [4] - Non-interest income was $28 million, representing a 16.7% year-over-year increase [4] - Non-interest expenses rose 12.8% year over year to $150 million [5] Credit Quality - Provision for credit losses was $108 million, significantly up from $16 million in the prior-year quarter [6] - Net charge-offs for private education loans were $93 million, showing a slight year-over-year increase [6] - The percentage of private education loans held for investment net charge-offs was 2.38%, contracting 5 basis points year over year [6] Balance Sheet Position - As of December 31, 2024, deposits were $21.1 billion, down 1.7% sequentially [7] - Private education loans held for investment were $20.9 billion, showing a marginal increase from the prior year [7] - Private education loan originations increased by 10% from the year-ago quarter [7] Share Repurchase - In the fourth quarter, SLM repurchased 11.6 million shares for $250 million under its 2024 share buyback program [8] 2025 Outlook - The company expects diluted EPS to be in the range of $3-$3.10 for 2025 [9] - Anticipated total loan portfolio net charge-offs as a percentage of average loans in repayment is projected to be between 2-2.2% [9] - Private education loan originations are expected to grow by 6-8% year over year [9] - Non-interest expenses are expected to be in the range of $655-$675 million [9] Final Thoughts - Overall financial performance appears decent, with robust loan origination, an increase in NII, and lower provisions for credit loss being positive factors [10]