Financial Data and Key Metrics Changes - GAAP diluted EPS for Q2 2025 was $0.032 per share, with loan originations at $686 million, roughly in line with the same period last year [5][6] - Net interest income for Q2 2025 was $377 million, up $5 million from the prior year, with a net interest margin of 5.31% [11] - Provision for credit losses increased to $149 million in Q2 2025 from $17 million in the prior year, reflecting a more cautious macroeconomic outlook [12][13] - Private education loans delinquent for 30 days or more were 3.5%, a decrease from 3.6% at the end of Q1 2025, but higher than 3.3% a year ago [13] Business Line Data and Key Metrics Changes - The credit quality of originations showed improvement, with a cosigner rate of 84%, up from 80% year-over-year, and average FICO at approval rising to 754 from 752 [8] - Non-interest expenses for Q2 2025 were $67 million, significantly lower than $155 million in the prior quarter and $159 million a year ago [15] Market Data and Key Metrics Changes - The recently passed federal student loan reforms are expected to create an additional $4.5 billion to $5 billion in annual private education loan origination volume for Sallie Mae once fully implemented [20][21] - The reforms will take effect on July 1, 2026, and are anticipated to have a muted impact in 2026, with larger effects expected in 2027 and beyond [19][21] Company Strategy and Development Direction - The company aims for mid to high single-digit growth in its private student loan portfolio, supported by loan sales and other funding strategies [23] - Sallie Mae is exploring new alternative funding partnerships in the private credit space to enhance capital efficiency and predictable returns [22][49] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the long-term outlook for private student lending, particularly due to federal student loan reforms [5][18] - The company is closely monitoring the impacts of federal lending reforms and other macroeconomic factors on its business [6][12] Other Important Information - The company repurchased 2.4 million shares at an average price of $29.42 per share, reducing shares outstanding by over 53% since the buyback strategy began in 2020 [9] - The liquidity ratio at the end of Q2 2025 was 17.8%, with total risk-based capital at 12.8% and common equity Tier one capital at 11.5% [16] Q&A Session Summary Question: Can you provide details on the $1.8 billion loan sale and gain on sale margin? - The pricing for the loan sale is in line with expectations, though slightly adjusted from earlier in the year due to changes in the rates environment [25] Question: Should we expect another loan sale in Q4 2025? - The company will monitor the peak season and evaluate capital levels before deciding on a potential sale [26] Question: Can you explain the uptick in net charge-off rates? - The increase is attributed to disaster forbearance related to the California wildfires, which shifted some charge-off timing [27][30] Question: How do you view the potential upside from federal lending changes? - The company believes the reforms could significantly increase private loan origination volumes, with a focus on maintaining market share [34][60] Question: What is the expected timing for new private credit partnerships? - The goal is to have partnerships in place before the additional volume from federal reforms begins [66] Question: How will the new market opportunity affect competition? - The company is confident in its ability to compete effectively, leveraging strong relationships and data insights [63]

Financial Data and Key Metrics Changes - GAAP diluted EPS for Q2 2025 was $0.032 per share, with loan originations at $686 million, roughly in line with the same period last year [6][10] - Net interest income for Q2 2025 was $377 million, up $5 million from the prior year, with a net interest margin of 5.31% [11] - Provision for credit losses increased to $149 million in Q2 2025 from $17 million in the prior year, reflecting a more cautious macroeconomic outlook [12] - Private education loans delinquent for 30 days or more were 3.5%, a decrease from 3.6% at the end of Q1 2025 [13] Business Line Data and Key Metrics Changes - The credit quality of originations showed improvement, with a cosigner rate of 84%, up from 80% in the year-ago quarter [8] - Net private education loan charge-offs in Q2 were $94 million, representing 2.36% of average loans in repayment, an increase of 17 basis points year-over-year [14] - Non-interest expenses for Q2 were $67 million, significantly lower than $155 million in the prior quarter and $159 million in the year-ago quarter [15] Market Data and Key Metrics Changes - The company anticipates that new federal lending limits could generate an additional $4.5 billion to $5 billion in annual private education loan origination volume once fully realized [21] - The reforms will take effect on July 1, 2026, with existing borrowers grandfathered into current programs, potentially impacting near-term originations [20] Company Strategy and Development Direction - The company plans to maintain a strategy of mid to high single-digit private student loan portfolio growth, supported by loan sales and other structures [24] - The management is exploring new alternative funding partnerships in the private credit space to support growth while preserving balance sheet capacity [23] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the long-term outlook for private student lending, particularly due to recent federal student loan reforms [6][19] - The company is closely monitoring the impacts of federal lending reforms and other policy developments on its business [7][20] Other Important Information - The company repurchased 2.4 million shares at an average price of $29.42 per share, reducing shares outstanding by over 53% since the start of the buyback strategy in 2020 [9] - The liquidity ratio at the end of Q2 was 17.8%, with total risk-based capital at 12.8% and common equity Tier 1 capital at 11.5% [16] Q&A Session Summary Question: Can you discuss the $1.8 billion loan sale and gain on sale margin? - The company is in line with expectations for the transaction, with modest adjustments in pricing due to changes in the rates environment [26] Question: Should we expect another loan sale in Q4 2025? - The company will monitor the peak season and evaluate capital levels before deciding on additional sales [27] Question: Can you explain the uptick in net charge-off rates? - The increase is attributed to disaster forbearance related to the California wildfires, which shifted some charge-off timing [28][30] Question: How does the new federal lending reform impact your growth algorithm? - The company maintains its growth framework but may trend towards higher growth rates due to the new opportunities presented by the reforms [34] Question: What is the expected market share for the new addressable market? - The company expects to maintain a market share in the 60% range for the new opportunities presented by the reforms [58] Question: What is the timing for the new private credit partnerships? - The company aims to have partnerships in place before the additional volume from reforms comes into effect [65]