Salliemae(US:SLM)2022-07-28 14:25Financial Data and Key Metrics Changes - GAAP diluted EPS for Q2 2022 was $1.29, up from $0.44 in the same quarter last year [6] - The company repurchased 20 million shares, reducing shares outstanding by 11% since January 1, 2022, and by 42% since January 2020 [7] - Net charge-offs from private education loans were $95.5 million, resulting in an annualized charge-off rate of 2.56%, exceeding the forecast of 2.25% [12] - NIM for the quarter was 5.29%, up from 4.7% in the year-ago quarter [12] Business Line Data and Key Metrics Changes - Private education loan originations for Q2 2022 were $616 million, a 16% increase over Q2 2021 [7] - The cosigner rate for Q2 2022 was 74%, down from 76% in Q2 2021, with an average FICO score of 746 compared to 750 in the previous year [8] - Consolidation volume showed signs of slowing, with a 21% decrease in monthly consolidation volume from June 2021 to June 2022 [8] Market Data and Key Metrics Changes - The high school class of 2022's FAFSA completion rate returned to near pre-pandemic levels at 52.1% [7] - The company expects 30-plus day delinquencies to drop in Q3 and end the year near 3% [11] Company Strategy and Development Direction - The company is focused on executing its loan sale and share buyback program while navigating a challenging economic environment [5] - Full-year net charge-off guidance was increased to $325 million to $345 million, reflecting expectations of higher charge-offs due to specific borrower cohorts [14] - The company plans to continue its share buyback program as long as it remains within the "green zone" of value creation [36] Management's Comments on Operating Environment and Future Outlook - Management noted that the college marketplace is finding its new normal after pandemic-related disruptions [14] - The company is monitoring its portfolio for signs of stress but reports that borrower FICO scores remain strong [23] - Management expressed confidence that the unique charge-off trends observed in 2022 will not repeat in future years [19] Other Important Information - Operating expenses for Q2 2022 were $132 million, unchanged from the prior quarter [13] - The company ended the quarter with liquidity of 20.3% of total assets and total risk-based capital at 15.6% [13] Q&A Session Summary Question: Concerns about the gap year population and future charge-offs - Management acknowledged the gap year population's performance has been worse than expected but noted that trends are normalizing [30][31] Question: Impact of credit administration policy changes - Management indicated that the impact of these changes is expected to be more temporary and specific to 2022 [41][43] Question: Clarification on loan sale premiums and strategy - Management explained that they assess loan sales based on a decision matrix considering premiums and stock multiples to create shareholder value [35][36] Question: Future provisions and charge-off expectations - Management confirmed that the current year's unique charge-off effects would not carry over into future years, leading to a lower provision run rate [51][53]