SLM (NasdaqGS:SLM) Q3 2025 Earnings Call October 23, 2025 05:30 PM ET Speaker9Thank you, Chloe. Good evening and welcome to SLM's third quarter 2025 earnings call. It is my pleasure to be here today with Jon Witter, our CEO, Pete Graham, our CFO, and Melissa Bronaugh, Managing Vice President of Strategic Finance. After the prepared remarks, we will open the call for questions. Before we begin, keep in mind our discussion will contain predictions, expectations, and forward-looking statements. Actual results ...

Financial Data and Key Metrics Changes - GAAP diluted EPS for Q1 2025 was $1.40, up from $1.27 in the same quarter last year, indicating a positive growth trend [6] - Loan originations for Q1 2025 reached $2.8 billion, a 7.3% increase compared to the previous year [6] - Net interest income for Q1 2025 was $375 million, down $12 million from the prior year but up $13 million from Q4 2024 [10] - Net interest margin was 5.27%, an increase of 35 basis points from the previous quarter [11] - Provision for credit losses was $23 million, up from $12 million in the prior year quarter [11] Business Line Data and Key Metrics Changes - The cosigner rate for Q1 was 93%, up from 91% in the year-ago quarter, reflecting improved credit quality [7] - Average FICO score at approval was 753, an increase from 748 in Q1 2024 [7] - Net private education loan charge-offs were $76 million, representing 1.88% of average loans in repayment, down 26 basis points from Q1 2024 [7] Market Data and Key Metrics Changes - Private education loans delinquent for 30 days or more were 3.6% of loans in repayment, a decrease from 3.7% at the end of Q4 2024 [12] - The volume of loan modification enrollments decreased by approximately 50% from the highs in Q3 2024, indicating improved borrower performance [13] Company Strategy and Development Direction - The company is focused on maintaining a capital return strategy, having repurchased 1 million shares at an average price of $29.65 per share [9] - The management emphasized a cautious approach to growth, balancing between expanding the balance sheet and returning capital to shareholders [37] - The company aims to continue optimizing its loss mitigation programs and enhancing underwriting capabilities to improve credit performance [20] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the positive momentum for the remainder of 2025, despite broader macroeconomic uncertainties [16] - The company reaffirmed its 2025 guidance, indicating a solid start to the year with expectations for continued performance [15] - Management acknowledged the potential impact of recent government policy changes on the broader economic environment but noted no immediate adverse effects on their operations [22] Other Important Information - The company completed a $500 million unsecured bond transaction during the quarter, which was used to redeem a maturing bond [10] - Liquidity at the end of the quarter was 16.8% of total assets, with total risk-based capital at 12.9% [14] Q&A Session Summary Question: Credit charge-offs performance and loss mitigation programs - Management attributed the positive charge-off performance to seasonality, loss mitigation programs, and enhanced underwriting capabilities [19][20] Question: Impact of government programs on borrower behavior - Management noted no significant changes in FICO performance among customers with federal loans and observed that joint customers had lower delinquency rates [25] Question: Changes in borrower behavior and graduate borrowers - Management indicated early signs of increased activity from graduate borrowers but emphasized that it was too early to draw strong conclusions [28] Question: Delinquency rate trends and extended grace usage - Management explained that the delinquency rate increase was influenced by borrowers in modification programs and that extended grace usage was functioning as intended [31][34] Question: Balance sheet growth and capital return strategy - Management highlighted a moderate growth strategy for the balance sheet while maintaining a commitment to capital return through share buybacks [36][38] Question: Job market challenges for graduates - Management acknowledged potential challenges in the job market but noted that recent graduates remained optimistic about meeting financial obligations [70][72] Question: Changes in university funding and its impact - Management stated that while reduced funding could lead to increased demand for private loans, the overall impact was still uncertain [62][64] Question: Character of buyers in loan sales - Management reported no significant changes in the makeup of bidders for loan sales compared to previous years [66] Question: Trading of student loan ABS post-sale - Management indicated that the market for student loan ABS was stable, with no material widening of spreads since the last sale [84]