Sallie Mae Tops Q4 Earnings on Y/Y Rise in NII & Non-Interest Income

Core Insights - Sallie Mae (SLM) reported a strong fourth-quarter performance with earnings per share (EPS) of $1.12, up from 50 cents in the prior-year quarter, exceeding the Zacks Consensus Estimate by 18.2% [1][2][9] - The company's GAAP net income attributable to common stock was $229 million, compared to $107 million in the same quarter last year, with full-year 2025 net income reaching $729 million, up from $590 million in 2024 [2][9] Financial Performance - Fourth-quarter net interest income (NII) was $377 million, an increase from $362 million in the prior-year quarter, beating the Zacks Consensus Estimate by 0.4%, with a net interest margin of 5.21%, expanding 29 basis points year over year [3][9] - Full-year 2025 NII totaled $1.5 billion, slightly up from $1.48 billion in 2024, matching the Zacks Consensus Estimate [3] - Non-interest income for the fourth quarter was $77 million, significantly higher than $28 million in the year-ago quarter [3] Expense and Credit Quality - Non-interest expenses rose 4.7% year over year to $157 million [4] - The company reported provision benefits of $19 million in the fourth quarter, contrasting with provisions for credit losses of $108 million in the prior-year quarter, primarily due to the release of reserves associated with loan sales [5] - Net charge-offs for private education loans were $98 million, slightly up from $95 million in the year-ago quarter, with charge-offs as a percentage of average loans in repayment at 2.42%, marginally higher than 2.38% in the prior-year quarter [5][6] Balance Sheet and Share Repurchase - As of December 31, 2025, deposits totaled $21.1 billion, relatively flat compared to the year-ago quarter, while private education loans held for investment were $20.3 billion, down from $20.9 billion [7] - Private education loan originations increased 4% year over year to approximately $1.0 billion [7] - In the fourth quarter, SLM repurchased 3.8 million shares for $106 million, with a total of 12.8 million shares repurchased for $373 million in 2025 under its share buyback program [8][10] Overall Assessment - The strong fourth-quarter performance was driven by solid growth in net interest income, higher non-interest income, and favorable provisions for credit losses, with stable loan originations and continued capital return being positive factors [11]