SLM Corp Q3 FY2025 earnings call

• Successfully completed the sale of approximately $1.9 billion in loans, generating $136 million in gains. - Continued capital return strategy, repurchasing 5.6 million shares at an average price of $29.45 per share. - Net interest margin was 5.18% for the quarter, 18 basis points ahead of the year ago quarter. - Provision for credit losses decreased due to a $119 million release from the third quarter loan sale. - Noninterest expenses were $180 million in the third quarter. - Optimistic about long-term outlook for private student lending, exploring alternative funding partnerships and expect to announce a first-of-its-kind partnership soon.

Loan originations for the third quarter were $2.9 billion, representing 6.4% growth over the year-ago quarter and 6% growth year-to-date. GAAP diluted EPS in the third quarter was $0.63 per share. Net interest income for the third quarter of 2025 was $373 million, up $14 million from the prior year quarter. The provision for credit losses was $179 million in the third quarter, down from $271 million in the prior year quarter. Private education loan net charge-offs in Q3 of '25 were $78 million, representing 1.95% of average private education loans and repayment, down 13 basis points from the year ago quarter.

• Anticipate selling a small portfolio of seasoned loans and a portion of recent peak season originations either in the fourth quarter or early 2026, and expect to designate loans as held for sale prior to year-end. - Expect GAAP earnings per common share for 2025 to be between $3.20 and $3.30, reaffirming other elements of the 2025 outlook including originations growth, net charge-offs, and noninterest expense metrics.

• Economic ambiguity and potential impact on borrowers' ability to meet obligations. - Credit and ABS market volatility and its potential impact on gain on sale margins. - Challenges related to student borrowers entering repayment and potential effects on delinquencies and charge-offs.

Q: Is there a way to think about the performance of current delinquency out further?

A: Pete Graham mentioned delinquencies are seasonally affected, but they view late-stage delinquencies and roll rates as stable, with confidence in long-term metrics.

Q: Any further texture on the new partnership sale?

A: Pete Graham said they're still in the final stretch of the deal and will release details when complete.

Q: Color on modification pace and roll-off?

A: Pete Graham noted successful performance of borrowers in modifications, with strong payment patterns among those in for 12 months or longer.

Q: Outlook for credit given delinquency trends?

A: Jon Witter and Pete Graham discussed that delinquencies are affected by seasonality and program terms, with confidence in roll rates and mod performance.

Q: Impact of credit and ABS market volatility on gain on sale margins?

A: Pete Graham said gain on sale margins are tied to market spreads and structure of purchaser's leverage takeout.

Q: Accounting impact of loans moved to held for sale?

A: Peter Graham explained that moving loans to held for sale releases CECL provisions but doesn't recognize gain on sale until sale is complete.

Q: Commentary on graduate repayment wave and job market?

A: Jonathan Witter discussed that early graduate unemployment rates are slightly elevated but not materially affecting borrowers' ability to meet obligations, and Sallie Mae is prepared to manage it.

Q: Buyback appetite and credit outlook?

A: Jonathan Witter mentioned continued commitment to buybacks, and Peter Graham said delinquency trends are seasonally affected with focus on late-stage and roll rates.