SLM Corporation Q4 FY2024 earnings call

• 2024 was a successful year with strong results, exceeding originations volume and credit quality expectations. Originations growth was 10% full year, ahead of revised guidance. - Balance sheet growth was 3.1% full year, with the Private Education Loan portfolio growing at 5.7%. - GAAP diluted EPS increased year-over-year, though EPS was slightly below revised guidance due to originations growth pressure and reserve build. - Credit quality improved with co-signer rates up to 90% and average FICO at approval up to 752. Enhanced payment programs contributed to strong credit performance. - Continued capital return strategy with share repurchases in Q4 2024. - Preliminary agreement on sale of approximately $2 billion of private education loans, expected to close early Feb 2025. - Balance sheet growth in 2025 expected to be in line with or slightly above the strategy shared at the 2023 investor forum, around 5%.

Private Education Loan segment: Fourth quarter 2024 private education loan originations were $982 million with new unfunded commitments of $817 million. Originated loan volume increased 17% compared to the prior year quarter. Full year 2024 private education loan originations were $7 billion, a 10% increase over 2023 and meaningfully ahead of the revised full year guidance of 8% to 9%. The Private Education Loan portfolio grew at 5.7% for the full year. GAAP diluted EPS in the fourth quarter was $0.50 and full year GAAP diluted EPS was $2.68, an 11.2% increase year-over-year. Net charge-offs for the private education loan portfolio were $93 million in Q4 2024 and $332 million for the full year, representing 2.2% of average private education loans and repayment, down 25 basis points from 2023.

• Full year 2025 Private Education Loan origination growth expected to be 6% to 8%. - Total loan portfolio net charge-offs expected to be between 2.0% and 2.2% of average loans and repayment. - Non-interest expenses for 2025 expected to be between $655 million and $675 million. - GAAP diluted earnings per common share expected to be between $3 and $3.10.

• Potential impacts of Plus reform and other external factors on the business. - Short-term funding pressures leading to NIM compression. - Seasonality and refinements to loan modification offerings impacting delinquencies. - Regulatory changes and their potential influence on the company's strategy.

Q: Can you talk about NIM contemplated in EPS guide?

A: Low to mid 5% is the target, with funding pressures abating as longer term funding matures and liquidity build for mini peak having an impact on NIM in the quarter.

Q: Thoughts on Plus reform and underwritability?

A: Supportive of Plus reform, majority of Plus loans may not fit credit box, private sector role potential with thoughtful reform.

Q: Explain 2025 origination growth guidance?

A: Expect a larger spring but typical fall due to comping back over ultra-high growth of last fall, with spring typically smaller than fall.