Salliemae(US:SLM)2026-01-22 23:32Financial Data and Key Metrics Changes - GAAP diluted EPS for Q4 was $1.12, and full-year GAAP diluted EPS was $3.46, compared to $2.68 in 2024, indicating a significant increase [8][10] - Private education loan originations for Q4 of 2025 were $1.02 billion, and for the full year, $7.4 billion, representing a 6% increase over 2024 [8][10] - Net charge-offs for the private education loan portfolio were $98 million in Q4 and $346 million for the full year, representing 2.15% of average private education loans in repayment, down four basis points from 2024 [9][15] Business Line Data and Key Metrics Changes - The company delivered its inaugural private credit strategic partnership, which is expected to contribute significantly to future originations [7][8] - The net interest margin was 5.21% for Q4, up 29 basis points year-over-year, and 5.24% for the full year, up five basis points [10] - Non-interest expenses for the full year were $659 million, a 2.6% increase year-over-year, reflecting disciplined expense management [17] Market Data and Key Metrics Changes - College enrollment trends for Tier 1 schools are up, indicating continued value in higher education [5] - The company anticipates that the recent federal student lending reforms could contribute an estimated $5 billion in annual originations, representing approximately 70% growth over 2025 [7] Company Strategy and Development Direction - The company plans to invest ahead of anticipated volume growth, with expected non-interest expenses for 2026 between $750 million and $780 million [20] - The strategic partnership business is expected to grow, with a gradual increase in the bank portfolio by one to two percentage points per year post-2026 [22] - The company aims to improve its efficiency ratio each year, targeting a return to the low 30s by 2030 [20] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the private student lending sector's robustness and the importance of education in the evolving job market [5][6] - The company expects private education loan origination growth of 12%-14% for 2026, driven by the new PLUS caps [19] - Management acknowledged the challenges in the job market for new graduates but emphasized the effectiveness of their support programs [56] Other Important Information - The company announced a new two-year $500 million share repurchase authorization [10] - The total allowance as a percentage of private education loan exposure was 6% at the end of 2025, up from 5.93% in the previous quarter [14] Q&A Session Summary Question: Impact of wage garnishment postponement on loan performance - Management indicated that the postponement would likely have a net benefit but not a significant impact on their business due to the difference in customer bases [26] Question: Modeling growth from Grad PLUS changes - Management expects modest incremental volume in the first year, with growth stepping up over the next two to three years [28] Question: Loan sales and partnership volumes in 2026 - The strategic partnership has a minimum commitment of $2 billion in new originations, with expectations of selling approximately 30% of originations [32] Question: ROI measurement for increased investments - Management emphasized the significant market opportunity and the disciplined approach to measuring returns on investments [42][44] Question: Confidence in credit outlook for 2026 - Management expressed confidence in the performance of borrowers in modification programs and the overall credit outlook [53][56]