Core Insights - Sallie Mae (SLM) reported Q2 2025 earnings per share (EPS) of 32 cents, missing the Zacks Consensus Estimate of 49 cents, and down from $1.11 in the prior-year quarter [1][8] - The decline in EPS was attributed to higher provisions for credit losses, a decrease in non-interest income, and increased expenses, although net interest income (NII) showed a positive trend [1][10] Financial Performance - The company's GAAP net income was $71 million compared to $252 million in the prior-year quarter [2] - Second-quarter NII totaled $376.8 million, up 1.2% year over year, exceeding the Zacks Consensus Estimate by 0.5% [3] - The net interest margin for the quarter was 5.31%, a decrease of 5 basis points from the prior-year quarter [3] - Non-interest income fell to $26.8 million from $141.8 million in the year-ago quarter [3] - Non-interest expenses increased by 5.5% year over year to $167.2 million [3] Credit Quality - Provisions for credit losses rose significantly to $148.7 million from $16.8 million in the prior-year quarter [4][8] - Net charge-offs for private education loans increased by 17.5% year over year to $94 million, with a net charge-off rate of 2.36%, up 17 basis points year over year [4][8] Balance Sheet - As of June 30, 2025, deposits were $20.5 billion, reflecting a 2% sequential increase [5] - Private education loans held for investment reached $21.2 billion, up 14.8% from the prior-year quarter [5] - Private education loan originations slightly declined to $686 million compared to the year-ago quarter [5] Share Repurchase - In Q2, SLM repurchased 2.4 million shares for $70 million under its 2024 share buyback program [6] Outlook - The company reaffirmed its 2025 outlook, expecting diluted EPS of $3.00-$3.10 [7] - Total loan portfolio net charge-offs are anticipated to be 2-2.2% of average loans in repayment [7] - Private education loan originations are projected to grow by 6-8% year over year [7] Additional Insights - Overall financial performance appears decent with robust loan origination and an increase in net interest income being encouraging factors, despite the rise in provisions for credit losses posing a near-term challenge [10]

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]

Earnings Presentation 2 nd Quarter 2025 1 Confidential and proprietary information. © 2025 Sallie Mae Bank. All rights reserved. CAUTIONARY NOTE AND DISCLAIMER REGARDING FORWARD-LOOKING STATEMENTS The following information is current as of July 24, 2025 (unless otherwise noted) and should be read in connection with the press release of SLM Corporation announcing its financial results for the quarter ended June 30, 2025, furnished to the Securities and Exchange Commission ("SEC") on July 24, 2025, and subseq ...

"A year ago, we announced three ambitious strategic actions – outsourcing servicing, divesting our business processing businesses, a non- strategic asset, and a more cost efficient and streamlined structure. We are pleased to say that we achieved our 2024 objectives against an aggressive timeline. These actions provide clear line of sight to our expense reduction targets, deliver value and position us for the future. We accomplished these steps while at the same time achieved strong loan origination growth, ...

Core Insights - Navient Corporation (NAVI) reported first-quarter 2025 adjusted earnings per share (EPS) of 28 cents, exceeding the Zacks Consensus Estimate of 19 cents, but down from 63 cents in the prior-year quarter [1] - The results were primarily driven by lower expenses, although there was an increase in provision for loan losses and a decrease in net interest income (NII) [1][8] - The company's GAAP net loss was $2 million compared to a net income of $73 million in the prior-year quarter [1] Financial Performance - NII decreased by 11.7% year over year to $144 million, surpassing the Zacks Consensus Estimate by 7.4% [2] - Total other income fell 80.1% year over year to $26 million [2] - Provision for loan losses rose to $30 million from $12 million in the prior-year quarter [2] - Total expenses decreased by 29.9% year over year to $131 million [2] Segment Performance - Federal Education Loans segment generated a net income of $24 million, down 40% year over year, with net FFELP loans at $30.2 billion, a 1.9% sequential decline [3] - Consumer Lending segment reported a net income of $46 million, a decrease of 36.9% from the year-ago quarter, with a private education loan delinquency rate greater than 30 days at 6.4%, up from 5% in the prior-year quarter [3] - Business Processing segment net income was $2 million compared to $6 million in the year-ago quarter [4] Liquidity and Capital Management - As of March 31, 2025, the company had $642 million in total unrestricted cash and liquid investments [6] - To meet liquidity needs, NAVI plans to utilize various sources, including cash, predictable operating cash flows, and may draw down on secured loan facilities or issue additional debt [5] Capital Distribution Activities - In the first quarter, the company paid out $16 million in common stock dividends and repurchased shares for $35 million, with $76 million remaining in share-repurchase authority as of March 31, 2025 [7] Strategic Outlook - The company is recognized as a significant holder of private education loans, with diversified business segments expected to support revenue growth [8] - Strategic actions to control expenses are anticipated to bolster financial performance in the upcoming periods, despite concerns over lower NII [8]

Core Viewpoint - Sallie Mae (SLM) reported strong first-quarter 2025 earnings, driven by increased non-interest income and robust loan originations, despite challenges from higher credit loss provisions and declining net interest income [1][9]. Financial Performance - Earnings per share for Q1 2025 were $1.40, exceeding the Zacks Consensus Estimate of $1.19 and up from $1.27 in the prior-year quarter [1]. - GAAP net income rose to $305 million from $290 million year-over-year [2]. - Net interest income (NII) was $375 million, a decrease of 3.1% year-over-year, but above the consensus estimate of $359.7 million [3]. - Non-interest income increased by 18.3% year-over-year to $206 million [3]. - Non-interest expenses decreased by 4.4% year-over-year to $154.6 million [3]. Credit Quality - Provisions for credit losses increased to $23.3 million from $12 million in the prior-year quarter [4]. - Net charge-offs for private education loans were $76.2 million, down 7.7% year-over-year [4]. - The percentage of net charge-offs for private education loans held for investment was 1.88%, a contraction of 26 basis points year-over-year [4]. Balance Sheet Position - As of March 31, 2025, total deposits were $20.07 billion, down 4.7% sequentially [5]. - Private education loans held for investment increased to $21.09 billion, up 7.1% from the prior-year quarter [5]. - Private education loan originations rose by 7.3% year-over-year [5]. Share Repurchase - In Q1 2025, the company repurchased 1 million shares for $31 million under its 2024 share buyback program [6]. 2025 Outlook - The company expects diluted earnings per share to be in the range of $3.00-$3.10 [7]. - Anticipated total loan portfolio net charge-offs as a percentage of average loans in repayment is projected to be between 2.0-2.2% [7]. - Private education loan originations are expected to grow by 6-8% year-over-year [7]. - Non-interest expenses are forecasted to be in the range of $655-$675 million [7].