Financial Data and Key Metrics Changes - GAAP diluted EPS for Q3 2025 was $0.63 per share, with loan originations of $2.9 billion, reflecting a 6.4% increase year-over-year and 6% growth year-to-date [4][5] - Net interest income for Q3 2025 was $373 million, up $14 million from the prior year, with a net interest margin of 5.18%, an increase of 18 basis points year-over-year [6][7] - Provision for credit losses decreased to $179 million from $271 million in the prior year, largely due to a $119 million provision release from the loan sale [6][7] Business Line Data and Key Metrics Changes - The cosigner rate for Q3 was 95%, up from 92% in the year-ago quarter, and the average FICO score at approval increased to 756 from 754, indicating strong underwriting discipline [5] - Private education loan net charge-offs were $78 million, representing 1.95% of average private education loans in repayment, down 13 basis points from the year-ago quarter [5][6] - Non-interest expenses for Q3 were $180 million, compared to $167 million in the prior quarter and $172 million in the year-ago quarter [9] Market Data and Key Metrics Changes - 4% of private education loans in repayment were 30 days or more delinquent, up from 3.6% at the end of the year-ago quarter, attributed to changes in loan modification eligibility criteria [7][8] - The company has seen stability in late-stage delinquencies and roll rates, with 80% of borrowers in loan modification programs making consistent payments after one year [8][9] Company Strategy and Development Direction - The company is optimistic about the long-term outlook for private student lending and is exploring alternative funding partnerships in the private credit space [10][11] - A first-of-its-kind partnership is expected to be announced soon, aimed at unlocking the value of the customer base and setting the stage for sustainable growth of fee-based revenues [11][12] - The company anticipates selling a small portfolio of seasoned loans and a portion of recent peak season originations, expecting GAAP earnings per common share for 2025 to be between $3.20 and $3.30 [12] Management's Comments on Operating Environment and Future Outlook - Management noted that despite economic ambiguity, there has been no material change in borrowers' ability to meet obligations [5][10] - The company is preparing for the impact of recent federal reforms, which are expected to create opportunities for growth in private student lending [10][11] - Management expressed confidence in maintaining a net charge-off rate in the high 1% to low 2% range over the long term [14][26] Other Important Information - The company has reduced outstanding shares by 55% since initiating its capital return strategy in 2020, repurchasing 5.6 million shares at an average price of $29.45 per share [5][6] - The liquidity ratio at the end of the quarter was 15.8%, with total risk-based capital at 12.6% and CET1 capital at 11.3% [9] Q&A Session Summary Question: Outlook for delinquency performance - Management expressed satisfaction with loan modification programs and expected stability in late-stage delinquencies and roll rates, despite a slight uptick in early-stage delinquencies [14][15] Question: Details on loan sale partnership - Management indicated that details on the loan sale partnership would be released once finalized, emphasizing the importance of the deal [15][20] Question: Impact of modifications on delinquency rates - Management noted that borrowers in modification programs have shown strong payment patterns, and they are optimistic about the upcoming wave of graduates transitioning into repayment [19][48] Question: Credit outlook and potential charge-offs - Management acknowledged the correlation between delinquencies and charge-offs but maintained confidence in their guidance and the effectiveness of their loan modification programs [24][34] Question: Buyback strategy and appetite - Management confirmed a commitment to aggressive share buybacks, with plans to assess timing and quantity post-partnership completion [86][87] Question: Opportunities from Plus Reform - Management sees Plus Reform as a significant opportunity for growth in private student lending, with potential annual origination increases projected in the $4 to $5 billion range [92][93]