Salliemae(US:SLM)2025-10-23 22:30Financial Data and Key Metrics Changes - GAAP diluted EPS for Q3 2025 was $0.63 per share [4] - Loan originations for Q3 were $2.9 billion, representing a 6.4% growth year-over-year and 6% growth year-to-date [5] - Net interest income for 2025 was $373 million, up $14 million from the prior year quarter [7] - Net interest margin was 5.18%, 18 basis points higher than the year-ago quarter [7] - Provision for credit losses was $179 million, down from $271 million in the prior year [8] - Non-interest expenses were $180 million, compared to $172 million in the year-ago quarter [12] Business Line Data and Key Metrics Changes - Cosigner rate for Q3 was 95%, up from 92% in the year-ago quarter [5] - Average FICO score at approval increased to 756 from 754 [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 [6] Market Data and Key Metrics Changes - 4% of private education loans in repayment were thirty days or more delinquent, up from 3.6% at the end of the year-ago quarter [10] - Stability in late-stage delinquencies and roll rates was observed [11] Company Strategy and Development Direction - The company is optimistic about the long-term outlook for private student lending and plans to explore alternative funding partnerships in the private credit space [14][15] - 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 [15] - The company anticipates selling a small portfolio of seasoned loans and a portion of recent peak season originations [16] 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 [6] - The company is encouraged by the opportunities created by recent federal reforms [14] - Management expressed confidence in maintaining a net charge-off rate in the high ones to low 2% range over the long term [21] Other Important Information - The company has reduced outstanding shares by 55% since initiating its capital return strategy in 2020 [6] - Liquidity ratio at the end of the quarter was 15.8%, with total risk-based capital at 12.6% and common equity Tier one capital at 11.3% [12] Q&A Session Summary Question: Outlook on delinquency performance - Management expressed satisfaction with the loan modification programs and expects stability in late-stage delinquencies and roll rates [20][21] Question: Details on loan sale terms - Management indicated that details on the loan sale will be released once the deal is finalized [22] Question: Performance of modifications and roll-off - Management noted strong payment patterns among borrowers in modification programs and is optimistic about their success [27] Question: Impact of credit market volatility on gain on sale margins - Management stated that gain on sale margins can vary based on market conditions, but they have historically achieved mid to high single-digit ranges [48] Question: Buyback appetite and authorization - Management confirmed a commitment to aggressive share buybacks, with plans to assess timing and quantity post-partnership completion [90] Question: General sentiment on credit outlook - Management believes that current economic conditions have not significantly impacted borrowers' ability to meet obligations, despite general concerns [93]