SLM Corporation Q1 FY2025 earnings call

• Jon Witter noted strong start to 2025, early credit performance encouragement, positive momentum despite macro uncertainty. • Pete Graham discussed net interest income, net interest margin, provision for credit losses, private education loan delinquency, noninterest expenses, and solid liquidity and capital positions. • Continued capital return strategy with 1 million shares repurchased in Q1. • Loan sale in Q1 generated $188M gains, expecting additional loan sales this year. • Optimization of loss mitigation programs with decreased loan modification enrollments.

GAAP diluted EPS in Q1 was $1.40 per share vs $1.27 in prior year. Loan originations $2.8 billion, up 7.3% y-o-y. Net private education loan charge-offs $76 million, 1.88% of average loans in repayment, down 26 basis points y-o-y. Net interest income $375 million, down $12M y-o-y but up $13M q-o-q. Net interest margin 5.27%, 35 basis points ahead q-o-q. Provision for credit losses $23M, up from $12M y-o-y. Noninterest expenses $155M, down 4% y-o-y. Liquidity 16.8% of total assets. Total risk-based capital 12.9%, common equity Tier 1 capital 11.6%. GAAP equity plus loan loss reserves over risk-weighted assets 16.4%.

• Reaffirming 2025 guidance shared on last earnings call. • First quarter performance reflects solid start and progress toward goals. • Will monitor broader macroeconomic uncertainty and provide updates in future calls. • Expect continued normalization of programs over medium term.

• Uncertainty created by recent policy changes and their potential implications for broader macroeconomic environment. • Economic outlook is a key variable in reserve modeling, need to closely monitor changes impacting future estimates.

Q: Your credit charge-offs did well this quarter. Attribute outperformance to loss mitigation programs? Any impact from government program changes?

A: Jon Witter said charge-offs have multiple contributing factors including seasonality, loss mitigation programs optimization, and underwriting capabilities enhancement. On government program changes, looked at FICO and joint customers, not seeing material impact yet.

Q: Delinquency rate improved sequentially but up y-o-y. Any color?

A: Peter Graham said impact of folks in mod programs in delinquency buckets, adjusting for that quarter's number is 3%.

Q: Growth in balance sheet and capital return post CECL phase-in?

A: Jon Witter said moderate, accelerating and predictable balance sheet growth is preferred, with thoughtful limits on growth to maintain capital return through loan sales and potential dividend.

Q: EPS good start but guidance unchanged. Cautiousness?

A: Pete Graham said loan sale results factored into guidance, no real adjustments yet due to no impact from macro uncertainty seen.

Q: Originations solid but growth not faster. Thoughts?

A: Jon Witter said within expectations, spring effect as expected, fall growth not to match last fall.

Q: Expense efficiencies solid. Sustainability?

A: Peter Graham said ongoing focus on operating leverage, committed to full year guidance.

Q: Policy changes impact on originations?

A: Jon Witter said too early to tell, gives and gets with policy changes.

Q: Job market challenge impact on numbers?

A: Jon Witter said recent grads still optimistic, transition period stress known, not materially impacting net charge-off rates yet.

Q: Extended grace growth reflection?

A: Jon Witter said positive outcome of educating customers on available programs.

Q: Student loan ABS trading since loan sale?

A: Peter Graham said market had volatility but currently fairly stable, monitoring for optimal sale timing.